Statistics Bureau Official: CPI Increase Will Exceed 5% In The Year.

Since the beginning of this year, the adjustment of macroeconomic policies has been intensified, the stock market has fallen, the housing market has changed abrupt, and the price of raw materials in the world has risen substantially, and the unstable factors in the economy have increased. But our export growth is fast and domestic demand is in good condition. Therefore, the general trend of the economy will tend to fall, but the magnitude should not be large, and the pattern of rapid growth will not change.

CPI increase will exceed 5% in the year.

Price is a lagged variable in economic change and has a decisive impact on the direction of macroeconomic policy. Therefore, let's start with the trend of consumer price CPI. The general judgement is that the increase will increase further and will exceed 5% in the year.

CPI rose from August last year, and then rose for 5 consecutive months. After the elimination of seasonal factors, the increase was positive, up to 0.7% in December 2009, and 2% in 5 months. After that, the price level stabilized, but the stability of the price level was temporary. In April, the rate of inflation rose again to 0.4%. At the same time, there are signs that the rise in May is likely to accelerate.

The pressure of price increase is mainly due to the excessive growth of money supply. In 2009, M1 grew by 32.4%, and this year's growth rate was very fast. At the end of 4, the growth rate was 31.3%, which is much higher than the normal demand of economic growth. The inflationary pressure is very large, and it is still increasing. Where these excessive funds flow, where there will be an accident, the price will go up, so it will be difficult to put down a place, but the other place will be bulged. Too much capital must have a way out. It is said that gold is now being launched again, but what will it be after gold?

Second is the downward pressure on the upstream products and the import prices of imported goods. In April, the purchase price of raw materials and fuels increased further, up 12% compared with the same period last year, and the producer prices rose by 8.5% compared with the same period last year, and the price of imported goods increased by 17.6% in March. These prices have risen very high and are still rising. Sooner or later they will be transmitted to downstream products.

Three, the interactive mechanism of oil and grain prices will be triggered again, that is, the rise in oil prices will lead to the conversion of grain into energy, which will lead to the rise in grain prices, which will have an important impact on the price increase in 2007 and 2004. China's automobile consumption has entered a path of high growth, and global oil prices are on the rise. In addition, pork prices are also a cause for concern. Now it has fallen very badly, offset the impact of other commodity price increases, and is also the reason for the lower consumer prices. However, the decline of pig stocks has laid a curse on the rise in meat prices. The rise in consumer prices in 2008 was mainly caused by the price of meat.

Regulatory policy: to prevent inflation

With the judgement of the price trend, the trend of regulation and control policy is easier to grasp. Last year, growth was guaranteed, but this year it was against inflation. This direction will not change for other reasons.

In order to prevent inflation, monetary policy adjustment began in October last year, marking the weakening of loans. But the overall effect of monetary policy is not obvious, and the growth rate of M1 has dropped very little. The reason is that while banks are shrinking funds, the source of capital is also shrinking, and household savings no longer pass through bank transfers. At the end of 4, the savings deposits of the residents increased by 14.9% over the same period last year, down 14.7 percentage points from the same period last year. The reasons for this situation are manifold, but the increase in inflation expectations is a very important factor. {page_break}

At present, because of the low inflation level, the central bank's control measures are moderate, and it can tolerate the rapid growth of M1 and demand deposits. However, when inflation exceeds the policy permitted scope, the regulation and control will increase rapidly. This time should be getting closer and closer.

Stock market adjustment is not yet in place.

Monetary policy adjustment first hit the stock market. In the four quarter of 2008, the stock market turned up, which corresponded to the starting point of the strong expansionary monetary policy. The weakening of the stock market in August last year was basically in line with the beginning of monetary policy. Of course, the ups and downs of the stock market are not only affected by monetary policy, but also the internal trend. The rise in November 2008 ended in August last year, although the adjustment time has been very long, but the adjustment is far from being in place. The final adjustment depth will depend to a large extent on the tightening of monetary policy.

The adjustment of housing market has just started. The apparent reason is that in the middle of April, a great effort has been put in place to control the excessive rise of housing prices to the height of the administrative accountability system. This is the most effective and powerful one in China, and the effect needs no doubt. However, there are deeper reasons for the adjustment of the housing market. First, the stock market has a linkage effect with the housing market. In 2008, the stock market went down and the housing market followed. Even if there was no regulation, this year it might be the same. Two, the tightening monetary policy will have a profound impact on the housing market. Therefore, the regulation policy has only accelerated the adjustment process of the housing market.

The overall economy will be affected, but it is still more optimistic.

Whether the adjustment of stock market and housing market will affect macroeconomic stability is a controversial issue, and the situation in different countries is indeed different. As far as China's situation is concerned, the relationship between the stock market and macroeconomic changes is not very close. The fluctuation of the stock market is far more frequent than that of the macro economy. Therefore, it is not easy to infer that the macro-economy will decline from the decline of the stock market.

The real estate industry is an important support for China's economic growth at this stage. Therefore, the adjustment of the housing market will have a greater impact on the macro economy, but there is no need to be too pessimistic about the housing market. The regulation is mainly aimed at the excessive rise in housing prices. If the adjustment of the housing market affects the macroeconomic stability, then the control policy will be reversed.

The negative impact of rising international raw material prices on China's economic growth is limited, in 2003 and 2007. The impact of rising prices of raw materials on the economy can be divided into two completely different situations: one is the price increase of exogenous nature, the damage to economic growth will be obvious at this time; the other is endogenous price rising, that is, the demand driven by the high economic growth will increase.

We have already analyzed the main factors which are unfavorable to the economic growth prospects, but the conclusion is still optimistic. The last remaining factor is also the most direct and important factor, that is, aggregate demand. From the perspective of external demand, exports improved rapidly in the fourth quarter of last year, and the growth rate jumped from negative to positive. The first four months of this year increased by 29.2%, and it has recovered to the high growth state before the global financial crisis. Although the rapid rise of domestic prices and the uncertainty of the RMB exchange rate have a negative impact on exports, the impetus of economic development to exports is strong, coupled with the trend of slow recovery of the global economy. Therefore, the rapid growth of exports is sustainable.

In terms of fixed asset investment and retail sales of consumer goods, domestic demand does not seem to be as good as last year, but the growth rate is still very high. There are also some evidences of excessive domestic demand. The first is the extraordinary growth of imports, which has increased by 60.1% in the first 4 months of this year. Such a high growth can only be driven by domestic demand. Two, the rapid rise in raw material prices is inextricably linked to domestic demand.

Monetary policy adjustment is mainly aimed at excessive demand. Generally, it will not cause insufficient demand, even if the adjustment is further intensified. Unless inflation is out of control, monetary policy will not shrink too much, nor will it significantly damage economic growth.