Imported Inflation: A Black Hand In The Price Rise Of Raw Materials

Nowadays, the Chinese people seem to be crying over the rising prices. People are still crying for tears, and the soaring textile raw materials -- cotton, chemical fiber and wool have come to the cocoon and just started. Flax raw materials Rising storm, and then look at the expression of the boss of our textile enterprises - it is already silent. This is not a disaster. For a long time, most of the operators of our textile enterprises have been struggling to pull their overloaded carriages. Now, the complicated situation in the period of great economic change has forced us to look up to the road of economic development in China and the world. With regard to the confusion of raw materials, we must take a serious look at imported inflation.

Imported inflation

Developing countries are doomed

The so-called "import" Inflation "It means that the origin of inflation is not endogenous in a country, but because inflation in other countries is transmitted into China through the form of international trade. The overall level of prices caused by external economic factors is transmitted to a country. In this regard, there is a clear explanation in the economic dictionary.

Imported inflation takes place only in an open economic system. This is just the right time in our country. It happens in two ways: the first is input through the rising price of raw materials. It is not difficult to understand that the raw materials needed for domestic commodity production in a country can be met through two ways: domestic production or foreign imports. If the price of raw materials imported from abroad increases, the price of domestic related commodities will be pushed up. As far as China is concerned, because of the depreciation of the US dollar, its purchasing power is reduced, and more dollars are needed to achieve the previous purchasing power, that is, the rise in prices. However, in order to ensure the price competitiveness of export commodities and maintain the RMB exchange rate and the US dollar in a very small margin, the price of these materials will rise at the same time as the depreciation of the US dollar causes the price of commodities to rise. At this time, because domestic consumers did not realize that this is a kind of inflation, the price of domestic commodities did not rise, resulting in no significant increase in the overall cost of living. Raw material price It did not increase with the emergence of inflation, so that the domestic price level did not increase significantly. However, when this price is transmitted to the export industry, for example, the textile industry in China has been exporting for many years, the result is that goods are still exported at the price before inflation. Although they are highly competitive in price, they are actually selling domestic resources at a low price, that is to say, the temporary prosperity of the export industry is derived from the cheap sale of domestic resources. Economists generally believe that such behavior is undesirable from the perspective of long-term sustainable development.

Let's look at the second way of inflation input through capital flow. In recent years, China's foreign exchange reserves have increased rapidly, some of which are foreign exchange earnings from the export industry, while a considerable proportion is the inflow of speculative capital abroad, which is what we call hot money. As inflation in the United States is caused by the Fed's currency spamming, the hot money has sufficient liquidity in the US and liquidity needs to be appreciated. China has become the target of international speculative capital. These speculative capitals will not invest in China for long periods of time, so they always rush to the capital market and real estate market. When a sovereign state influences the capital market and real estate market by policy regulation or other unfavorable factors, these hot money will flow into the commodity market and other non bulk commodity market. It is particularly noteworthy that when hot money withdraws from huge profits, the people who pay for them tend to be at the bottom of the society.

Economists remind us that the severity of imported inflation affects the domestic economy generally depends on the following factors: the gap between international market prices and domestic market prices; the proportion of the open economy in the overall economy; the sensitivity of domestic policy adjustments and choices. Generally speaking, the greater the gap between the international market price level and the domestic market price level (the domestic commodity price level is much lower than the world commodity price system level), the higher the proportion of the open sector in the overall economy, the worse the sensitivity of domestic policy adjustment and selection, the more serious the impact of imported inflation on the domestic economy will be.

Imported inflation

Promoting prices of raw materials and agricultural products

There is another fact that can not be ignored. When the second round of quantitative easing monetary policy opened the floodgates of the United States, hot money flowed into many developing countries, including China, so that the price of international grain and commodities (including cotton) increased rapidly, and at the same time, the cost and price of domestic goods were also pushed up. Zhou Xiaochuan, governor of the people's Bank of China, has said that the recovery of developed economies has slowed down, and monetary conditions have continued to be loose, which has led some emerging economies to face some pressure of capital inflow. Although China's overall economic situation is improving, we must also be vigilant against this. Zhao Xijun, vice president of the school of Finance and finance, Renmin University of China, said that the risk of hot money is worth paying close attention to. Massive short-term capital flows into and out very quickly will have many adverse effects on the local economy. When inflow, the price level of the local market will rise sharply, and the real estate market and capital market will be stimulated to rise. On the contrary, once these capital flows out in a short time, the real estate market and capital market will drop sharply, which will bring instability to economic development and serious financial crisis.

"Some countries start a new round of monetary easing policy to further promote the prices of raw materials and agricultural products. These new situations will have a certain impact on China's economic development, including price movements, and it is very important to increase inflation expectations." Sheng Lai Yun, a spokesman for the National Bureau of statistics, said.

Under the constantly strengthening inflation expectations, ordinary people began to think about how to "run" with the CPI increase: some people began to calculate carefully; people bought more rice, flour or vegetables, or filled their home electric cards and gas cards as "hoarding families"; others also bought more gold and other investment products in order to hedge assets and hedge inflation. However, the experts asserted that the fundamental factors that push up CPI at present can not be changed in the short term, such as the quantitative easing monetary policy led by the United States, the rising labor cost in China, and the marketization of factor resource pricing.

From the perspective of the textile industry, cotton and many kinds of chemical fiber materials have gone up. Wool has been leading all along, and cocoons are not to be outdone. Recently, a message from "the Great Northern Wilderness group of large state-owned enterprises to buy flax raw materials in Europe" has recently emerged. "The Group invested 400 million yuan in the European market and swallowed" 20 thousand tons of flax fiber, accounting for 2/3 of the total European linen inventory. The move immediately brought about the rising price of international flax fiber. It is understood that "the Great Northern Wilderness" is a state-owned listed company with strong financial strength. This large purchase of flax raw materials has further pushed up the price of European flax raw materials. As China's flax industry has been in the raw material and market for a long time, in July 4th, China's Textile Industry Association held a forum of vice presidents (linen) in Beijing to study the status quo of the industry and explore solutions, and appealed to all parties to safeguard the overall interests of the linen textile industry. Although this is a case, it is not difficult to see the passive position of our textile production enterprises. Du Jianbin, who is invited to attend the Symposium of linen industry, has a few words of deep thinking: "today, when we have bought a raw material from the Great Northern Wilderness, we are so scared. Then we will come out tomorrow to buy a raw material. There is no doubt that market economy and capital are king. So our flax enterprises will not survive. The key is that we have to transform ourselves! For so long, we do not build bases for raw materials. We have not done a good job in developing flax, a domestic market that can make high-grade textiles completely. We do not start looking for changes in the industry, starting from every bit of bit and down-to-earth, wolf, what are we waiting for?