This is the 1343rd original article of Panda Beibei
Image source: Headline Gallery
1
Essential mining: From China's successful experience in dealing with inflation several times, understand China's institutional advantages
Looking around the world, China's ability to deal with and solve inflation is undoubtedly the most successful. Moreover, in the past few decades, China has accumulated enough experience and prepared for methods and tools in the management of inflation.
Objectively speaking, China, a country, has a kind of disgust and sensitivity to inflation that is engraved in its bones.
uses the CPI price index for more than two consecutive quarters as a measure of inflation or deflation, and judges that China has experienced five inflation and three deflations since the reform and opening up, all of which last for more than one year. The following figure marks the years when these inflation and deflation reached their extreme values.
Image source: Internet
There is no need to analyze it far, it is of little significance. It can be seen from the five inflations since the reform and opening up, how China responds to and results:
Previous inflation analysis in my country
(I) 1980
After the end of the "Cultural Revolution", in order to restore the domestic economy, since 1978 Third Plenary Session of the Eleventh Central Committee, my country has implemented the reform and opening up policy, and the focus of the Party's work has shifted to socialist modernization. Subsequently, the economy experienced rapid growth. Large-scale investment and construction of infrastructure led to a surge in fiscal expenditure and a relatively serious fiscal deficit. In order to solve the fiscal deficit, the central bank issued a large amount of money. The money supply M0 expanded from 21.2 billion yuan in 1978 to 34.62 billion yuan in 1980, an increase of 63.3%. Excessive currency issuance will inevitably cause inflation , and the CPI price index rose from 0.7% in 1978 to 7.5% in 1980.
The rapid upward inflation attracted the attention of the government. In order to curb inflation, in December 1980, the State Council issued the "Notice on Strictly Controlling Prices and Rectifying Negotiations". The government took a series of measures such as reducing investment in infrastructure and shrinking monetary policy. Inflation was suppressed in 1981, which lasted for more than two years.
(II) 1985
In order to curb this inflation, the State Council has adopted a series of macro-control policies, reducing currency issuance, controlling the scale of fixed asset investment, and curbing the rise in prices. This inflation lasted three years. Inflation was just under control in 1985, and my country immediately experienced the third inflation since the reform and opening up.
(III) In 1988,
In order to straighten out the price mechanism of , the central government liberalized the prices of meat, eggs, vegetables and sugar in the first half of 1988. At the end of July, the prices of famous cigarettes and alcohol were liberalized. The prices of famous cigarettes and alcohol rose by 5 to 10 times, and the society experienced a rush to buy. In this case, a plan was planned to introduce a price and wage reform plan. Reform requires a stable economic growth environment. In order to maintain a high growth rate of the economy, the tightening policy began to loosen. The year-on-year growth rate of money supply M0 rose from 19.4% in 1987 to 46.7% in 1988, and the CPI price index soared to 18.8% in 1988.
In 1989, the central government held a meeting to rectify the economic order, adopted policies such as reducing total social demand, controlling the scale of loans, tightening monetary policy, and raising interest rates to recover money. In 1990, inflation was controlled, which took three years.
(IV) 1994
In terms of suppressing inflation, the government adopted a tightening monetary policy , increasing bank deposit and loan interest rates, reducing the money supply, and inflation was controlled in 1996, which took three years.
(V) 2011
stabilized prices became the top priority at the time. The central bank implemented a tight monetary policy and intensively raised the benchmark interest rate and the reserve requirement ratio. From 2010 to 2011, it raised the benchmark interest rate 5 times and 12 reserve requirement ratios. By June 20, 2011, the deposit reserve ratio was as high as 21.5%. Inflation was controlled at the end of 2011, which took more than a year.
Image source: Internet
Through historical review and analysis, it is not difficult to find that my country's inflation is mostly caused by the wave of market economy reform, accompanied by a rapid economic rise. Through large-scale issuance of currencies, expanding infrastructure investment and real estate investment construction, stabilizing economic development. The macroeconomic is reflected in the rapid increase in investment growth and supply of goods, and the CPI price index rises accordingly. In the face of inflation in different periods, the government has taken various response measures, shrinking monetary policy reduction currency circulation and controlling investment to compress total social demand are the two most frequent and best-effect policies of the government.
Review the experience of China's successful response to inflation since the reform and opening up of the new China, and the obvious conclusion is that China has obvious national system advantages in dealing with monetary inflation.
Don’t think this is all for granted. The ability to control inflation actually determines the long-term fate of a country and economy in the economic era.
Of course, large-scale inflation countries can solve the problem, and small-scale market speculation, such as the garlic, ruthless army that appeared around 2010, how many more can they jump after the Chinese country takes action?
has a well-founded statement that the hyperinflation caused by capital expansion and human desires actually has no long-term existence in China and has caused trouble.
Please remember this important conclusion. How can you say it with your mouth?
Image source: Toutiao Library
2
Based on cognition, how should we rationally judge the signals released by economic data in September 2022?
Back to the present, On October 14, the Bureau of Statistics released September price data: CPI rose 2.8% year-on-year, expected 3%, the previous value was 2.5%; PPI rose 0.9% year-on-year, expected 1.1%, and the previous value was 2.3%.
Picture source: Bureau of Statistics official website
Picture source: Bureau of Statistics official website
Then a group of arguments that advocate Chinese inflation appeared, and it is also well-founded:
Inflation may rise in the future, three factors:
The epidemic has caused low consumption, and inflation pressure is temporarily hidden
Monetary easing has led to a large amount of base currency, and future hidden dangers: (This year's M2 currency increase is equivalent to: one UK, two Russia, three Iran , four Saudi ...)
The depreciation of the RMB in the third quarter set a historical record, and the pressure of import price increases may appear 3-6 months later
directly concluded that the CPI did not exceed the market interest rate, nor did it even reach the policy interest rate. Talking about inflation is a hooligan.
Go further, considering the continued impact of the epidemic on business activities and the economic environment, based on the current economic data trend, what China's economy should consider more is the risk of deflation!
Starting from the data, we will analyze it based on evidence:
html CPI rise in September was mainly due to food, and both non-food CPI and core CPI are slowing down. Among foods, pork and vegetables are the two main driving factors. The price of vegetables in September was slightly more seasonal than the previous season, and was partly related to the early high temperature and rainy weather.
9 non-food CPI was 1.5% year-on-year, lower than the previous value of 1.7%; the core CPI was 0.6% year-on-year, lower than the previous value of 0.8%. The rise in
CPI was mainly caused by food prices. The CPI food items in September were 8.8% year-on-year, higher than the previous value of 6.1%.
If food is further split, pork and vegetables are the main driving force. In September, the price of fresh vegetables rose by 6.8% month-on-month, driving the year-on-year increase from 6.0% of the previous value to 12.1%; the price of pork rose by 5.4% month-on-month, driving the year-on-year increase from 22.4% of the previous value to 36.0%.
html rental rental in September was -0.2%, lower than the zero growth in August and lower than the normal seasonality.70 new commercial housing price index in large and medium-sized cities is also in a relatively weak range, with negative growth since February 2022.
To understand this data, we must first understand the economic red line management logic of China's country
China does not have the possibility of hyperinflation, mainly because the country has strictly controlled basic people's livelihood consumption for a long time.
What is basic people's livelihood consumption? It’s very simple, food, clothing, housing and transportation.
sub-item explanation, and it is clear at a glance:
clothing, this is fine, overproduction of China's industrial manufacturing, clothing prices have no room for speculation in China, and producers are dying. In fact, this problem will not exist after China's reform and opening up;
food, basic grain prices, national control red line, absolute red line that capital and interest groups dare not touch. Ensuring grain prices is a national strategy at the national policy level. Friends in the city don't know, so they will tell you that minimum living security , the minimum standard for five-guarantee households is actually formulated based on grain prices. In China, it is a luxury to starve to death.
living is not the price of commercial housing, but the rent. It is based on government public rental housing and low-rent housing as the standard. Basically, as long as you have a labor income, you can reach it;
travel, there is no need to say more about this. China's travel price is the lowest in the world, and the world's first in basic highways and high-speed rail construction.
As long as the four red lines of people's livelihood consumption foundation can be kept, China's economy will not cause chaos, after all, a big country with a population of 1.4 billion.
However, other non-basic consumption has cyclical rises and fluctuations, so we cannot demand that the country should control it according to its ideals.
The country can support the bottom line to ensure that 1.4 billion people have enough food and clothing, but it cannot guarantee that everyone can buy commercial housing, and they are big fish and meat every day.
Back to the September data, it is actually the price increase of pork cycle that has driven the CPI. Without the price increase of pork, there will be no CPI performance.
Take off the pork and talk about inflation? It's simply a misleading child.
Isn’t it just that you want to use the inflation concept to sell anxiety to the market and the people, and deceive more groups who are struggling to survive under the pressure of the epidemic, add leverage to buy a house, or use your savings to invest?
makes money, it is understandable, but if you fool things around, you will lose your conscience.
hits the essence directly, and rationally judges:
- 9 CPI and PPI growth in September were both lower than expected, and showed that the total demand was weaker than expected.
- 9 CPI rebounded slightly compared with August, mainly due to the prices of pork and vegetables, which is a seasonal factor.
- The average CPI in the first nine months of 2022 is 2.0%, and it will fall in the fourth quarter, and the annual inflation is completely worry-free.
- PPI fell back at a high level, falling below 1, and the deflationary pressure of increased.
- core CPI rose only 0.6%, which is a very low number. The core CPI has been low this year (less than 1.5). html There is a possibility of further interest rate cuts and reserve requirement ratio cuts within 18 years.
Inflation or deflation is a matter of direction, which is very important. The harm of inaccurate direction is greater than doing nothing.
Image source: Toutiao Gallery
3
Trend judgment: What possible changes will China's economic environment usher in in the next fourth quarter?
In the next fourth quarter, the direction of China's economy is affected by the comprehensive influence of the two dimensions of the peripheral and internal dimensions. Here we briefly talk about a few personal trend analysis points:
1, The Federal Reserve's interest rate hike continues, global liquidity tightens, curbs demand, is not conducive to China's foreign trade exports, and has a containment effect on China's foreign exchange 's revenue generation, corresponding to the domestic adjustment space that will squeeze monetary policy and interest rates. Trends like
will continue to be strengthened before the monetary policy of the Federal Reserve turn. In general, China's domestic economy does not actually have room for full liberalization at present.
2, war naturally has an inflationary nature. For China, the biggest impact of the Russian-Ukrainian conflict is actually the impact of imported inflation. Objectively, the country has fully alleviated and resolved such pressures. However, the direction of the Russian-Ukrainian conflict will still have inflation impacts on a global scale.
3, China's epidemic control and national attitude are the biggest source of current deflationary pressure in China's economy. Of course, this is not of any significance. The fact is that China's subsequent economic recovery and consumption recovery, the adjustment of the epidemic and corresponding control are crucial.
4, the grand tone of "housing for living, not for speculation" has become a reality, and real estate will not become the object of concentrated monetary phenomenon.
5, considering the impact of the strong dollar cycle, China's financial market needs to be cautious and do not have expectations of stable and continuous market conditions.
should be more of a fluctuation adjustment accompanied by the economic game between major countries.
is concise and concise, not talking nonsense, just hit the key point.
Image source: Toutiao Gallery
at the end:
Trust the economic management capabilities of China's country, believe in the potential and sustainable development capabilities of China's future economy
0 The article ends, let me talk about a few personal opinions:
1. In the year of 2022, especially in the fourth quarter, there is still great uncertainty. The stock market and housing market continue to wait and see, waiting for the opportunity.
2, domestic monetary policy is an inevitable trend, and we continue to be optimistic about the value of safe assets of long-term treasury bonds.
3, loose currency and tight credit are inevitable, this is the inevitable logic of national economic control.
4, the interest rate continues to decline, but the space is limited.
5. Some overheating may occur in the short term outside of national economic security. We should look at it rationally, and not be affected by the so-called inflation risk argument.
6, the CPI peak may have appeared this year. The reality of China's economy in the future is to alleviate deflationary pressure, rather than solve any non-existent inflation risks.
7, an important meeting in China in October deserves great attention. There will be many clear signals for the subsequent trend and trend of China's economy to be released at this meeting.
or above is the special analysis and discussion content of the economic data in September, and share it with all readers and friends.
On the occasion of the conference, I sincerely wish my motherland, prosperity and hope that the Chinese country can lead all Chinese people to a better and more promising tomorrow!
Image source: Toutiao Picture Library
(According to the latest regulations of relevant national departments, the content and opinions of this article are for reference only and do not constitute any clear suggestions on property purchase, investment, etc., and you can bear the risk of entering the market at your own risk.)
or above text, from @Panda Beibei Little Cute
2 A young friend who dares to tell the truth, can tell the truth, and is good at observing?
Original writing sharing is not easy. If you think the article is good, please forward and like it. Follow me for the original strength of
, and the headlines are exclusive. If there is any plagiarism, transportation and infringement, it will be prosecuted!
If you have any questions, please leave a message. If you don’t, just send a private message. For civilized communication, you will be answered questions and thank you.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-