China may raise tobacco price to curb consumption

China is studying the possibility of increasing prices and hiking tax to curb the consumption of tobacco, an official said.

Miao Wei, minister of industry and information technology, and a deputy to parliament, the National People’s Congress, said it was important to reduce the number of smokers and the amount of tobacco they use.

China now has 350 million people smoking, and over one million people die of smoking-related diseases annually, the China Daily reported.

The report said studies have found that when tobacco prices are increased by one percent, the number of smokers goes down by 0.4 percent.

Health Minister Chen Zhu last week said the move follows a tax hike on cigarettes in 2009, which could not meet the country’s target of easing the rising use of tobacco.

“Most of the growing proportion of smokers are young adults who consume low-end cigarettes and are sensitive to price,” he said.

China National Tobacco Corp, the state-owned cigarette company, reported an annual net profit of 118 billion yuan (around $19 billion) in 2010. But it evoked widespread public criticism of the company’s windfall at the cost of people’s health.

The mounting health concerns forced authorities to raise the levy on cigarettes by six to 11 percent in May 2009. But the tax did not curb cigarette use as some experts expected.