How To See Inflationary Pressure In The Process Of Economic Stabilization

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In order to cope with the impact of the international financial crisis, our government has implemented a moderately loose monetary policy. In 2009, new loans amounted to 9 trillion and 590 billion yuan, more than two times the number of new loans in 2008. The combination of a large number of new loans and the monetary multiplier will lead to the expansion of the money supply, which will lead to the expansion of demand in real estate, stock market, real economy, and so on. It can be said that the main reason for the inflation expectation is no longer caused by the traditional shortage of supply, but rather the result of excessive currency. Therefore, it is essentially a monetary phenomenon.

In addition, in the fourth quarter of 2009, housing sales prices in cities, especially in the first tier cities, rose rapidly, making people more and more worried about the trend of rapid devaluation of household assets such as deposits in the purchase of housing, which also increased people's expectation of inflation.

In addition, it has been driven by cost factors in recent years. Agriculture products Prices continued to rise moderately. This year, due to weather factors, vegetables, fruits and other products supply short term tension, the reduction of international soybean production led to the reduction of edible vegetable oil supply; holiday factors led to short-term expansion of demand for eggs and other foods, and speculation factors led to the expansion of demand for small varieties of agricultural products such as mung bean and garlic. These changes in supply and demand caused some food prices to rise more frequently in the short term. In addition, pork prices continued to recover after a year of recovery. Because food demand is a basic living demand, everyone has to contact each day. The rise in food prices has caused widespread concern among residents about inflation.

Moreover, the recent rise in soybean prices in the international market, the adjustment of domestic edible vegetable oils, and the promotion of resource price reform may raise the price of coal, water, electricity and gas in cities and towns. The combination of these information has increased the worries about inflation and increased the pre inflation period.

The real economy itself can control inflation pressure.

After the macroeconomic regulation and control since 2010, the factors that may cause inflation are generally controlled.

First of all, in view of the excessive supply of money, China's monetary policy has been targeted. The central bank strengthens the open market operation, mainly by issuing notes, and supplemented by short-term repo operations. It constantly optimizes the combination of operational tools and flexibly regulates the liquidity of the banking system. In order to control the problem of excess liquidity, the people's Bank of China raised the deposit reserve ratio of deposit financial institutions three percentage points in January 18, 2010, February 25th and May 10th, 0.5 percentage points respectively. In October 19th, the central bank announced a 0.25 percentage point increase in the benchmark interest rate for one-year lending and lending of financial institutions. This is the first time China has raised interest rates since December 20, 2007. Data show that in 2010 1~9, the number of new loans increased by less than 2 trillion and 360 billion yuan, and the M2 balance increased by 19% compared with the same period last year, which was 6 percentage points lower than the beginning of the year. The excessive growth momentum of money supply is under control.

Secondly, in view of the rapid rise of housing prices, in April 2010, the State Council promulgated the new "ten countries". In September 29th, it announced the notice of further strengthening the management of mortgage loans, and many measures of central and local governments to control housing prices were receiving results. From June 2010, the rapid rise of housing prices slowed down significantly. In September, the sales price of housing in 70 large and medium-sized cities rose by 9.1% over the same period last year, down 0.2 percentage points from August.

Moreover, the overall supply and demand relationship of the economy is generally balanced. In 2010, the dynamic structure of China's economic growth began to change positively, and gradually shifted from government power to market driven force. With this change, demand growth tends to slow down. In the spanformation from government support to market forces, the growth rate of investment was significantly reduced. On the other hand, there is great potential for supply. On the basis of rapid growth of production capacity, the tension of supply and demand has basically changed. The heavy chemical raw material has changed from supply strain to overcapacity, and the tension of coal electricity and oil spanportation has basically been eliminated. Clothing, home appliances, electronic information, digital products, cars and other industrial consumer goods supply capability is strong. On the basis of the steady growth of demand and huge supply potential, the overall supply and demand relationship of China's economy has maintained a general balance, and the situation of partial excess has supported the stability of prices.

Another important point is that food prices will not rise rapidly. At present, China's residents' demand for food is generally stable and its growth is relatively slow. The Engel coefficient of urban and rural residents (the proportion of food expenditure to total consumption expenditure) has been decreasing. On the other hand, China's grain production has provided a basic guarantee for food supply. The production of important food such as live pigs and vegetables has been highly valued, and the production level and stability have been gradually improved. Grain and other main foods, if we consider the inventory factor, the overall supply is more than demand. This supply and demand relationship determines that food prices will not rise rapidly.

However, we must be vigilant against the negative effects of slow growth in farmers' income. If this problem is not solved, it will inhibit farmers' enthusiasm for farming and block the development of agricultural production, which will eventually lead to a shortage of food supply and a sharp rise in food prices. Therefore, the government has taken the initiative to raise the minimum purchase price and make up for the low growth of farmers' income. It has played a very important role in stabilizing farmers' enthusiasm for farming. At the same time, the price of agricultural products continued to rise moderately.

We must realize that the rising price of food driven by this cost factor is more obvious in the modernization process of all countries. On the one hand, the price increase will not be great. On the other hand, this price increase is necessary and will continue for a long time, reflecting the adjustment of the income gap between agriculture and non-agricultural industries. If our life can not be separated from agricultural production, we must accept this adjustment.

In addition, imported inflation pressure will not be particularly large. The price change of bulk primary products depends fundamentally on the real demand for these products. The economies of developed countries are large and occupy a high proportion of the global economy. The demand changes in these countries dominate the change of international market demand. As the recovery of the developed economies is difficult and the market demand is sluggish, the constraint on the expansion of the government's expenditure is increasing, so the demand for these products is growing slowly. Although China and other emerging developing economies are recovering faster and growing faster in demand, they cannot lead to changes in demand in the international market. On the whole, the real demand of bulk primary products is in a low growth state. The increase and weakness of the US dollar may lead to an increase in speculative activities in bulk primary products, but will be more prudent in the speculative activities due to the real demand and supply relationship. Generally speaking, the price of bulk primary products in the international market will not generally rise substantially. Considering the factors of RMB appreciation, we can think that the pressure of China's import inflation is not large.

Asset bubbles need to be addressed.

The total demand of the economy will enter a stable growth period, and the market competition will become more intense. The price level determined by supply and demand will also enter a low rise period. At the same time, the cost of resources, labor and other factors will continue to increase, and the acceleration of the price reform of resource elements will lead to the pressure of price increase driven by cost and reform. But on the one hand, technological progress and the improvement of the quality of workers and the increase of labor productivity will reduce the cost and reduce the price. China will enter a period of low price increase and the adjustment of the price structure of different products. At present, our country