How does China cope with the new round of inflation?

How does China cope with the new round of inflation?

It is misleading to suggest structural inflation and structural price increase now.

We say structural price rise or structural inflation, which I think is a vague formulation. Can't stand scrutiny. Why can't it stand scrutiny?

First of all, there is no so-called unstructured inflation in the world at present. You said it was structural inflation. What is unstructured inflation? There is no such formulation at present. There is no such inflation in the world, that is, all commodities are rising at the same speed at the same time. This phenomenon does not exist in real life. On the contrary, when prices go up, some commodities always go up first, while others go up later. For example, this round of price increases started with food commodities and then spread to other commodities. At present, China's housing prices are not recorded in CPI, but in the United States. If house prices are also recorded in CPI, it should be said that house prices have been rising since 2006.

Second, the CPI we have announced now. This is the National Bureau of Statistics. According to different types of consumer goods, ordinary families get a total information index. In other words, CPI itself has undergone structural treatment, such as the proportion of food, clothing, household appliances and transportation in the eight categories of goods and the weight in various CPI. Some of them have risen fast, some have risen slowly, and even have fallen. However, after structural treatment, the whole CPI has risen and fallen, if some have risen, some have fallen. This is my personal opinion. It is misleading to suggest structural inflation and structural price increase now. People believe that our whole economy is not overheated and we have no inflation. This is just a structural problem.

For example, the price of food has gone up, so we can keep it low. In fact, this "expedient measure" does not help to solve the overheating problem of the whole economy. Therefore, my point is that the prices of our entire consumer goods are rising in an all-round way at present, and the rate of increase is so high that we should face up to the reality and stop using the words structural price rise or structural inflation. In this case, it will mislead people and will not help us solve the problem of overheating. This is my view on the current situation of rising prices in China.

This time, the most direct cause of inflation is too much money.

What are the reasons for this round of overall price increase or this round of inflation? We believe that the most direct cause of inflation is definitely the excessive issuance of money. I remember that in the middle of18th century, Hume, a British classical economist, put forward a famous argument. He said that where there is too much money in circulation, commodity prices will definitely rise. He is regarded as the founder of the theory of currency operation. Now Friedman, the famous founder of monetarism, also said a famous saying, "Long-term sustained inflation always and generally exceeds the increase of production due to the expansion of money quantity, thus producing a monetary phenomenon."

According to their analysis, I think the current inflation situation in China is caused by too much money. We have several sets of data here. One is issued by the People's Bank of China. In 2007, China's money supply increased rapidly. By the end of 2007, the generalized M2 balance was 40.3 trillion yuan, a year-on-year increase of16.7%; The narrow balance was 1 yuan, up 2 1 year-on-year. Through these three sets of figures, the overall growth rate of M2 and M0 has been greatly improved compared with the same period of last year. At the same time, by the end of 2007, RMB loans of financial institutions had increased by 3,632.3 billion yuan compared with the beginning of the year, which means that RMB loans of financial institutions in 2007 had increased by 448.2 billion yuan compared with 2006. As can be seen from this set of figures, our money is put in too much and too fast, which is what we commonly call "excess liquidity". The People's Bank of China has also taken many measures to deal with the phenomenon of excessive money supply or excess liquidity. For example, the People's Bank of China raised the deposit reserve ratio 65,438 times in a row last year. Our deposit reserve ratio was 9% at the beginning of 2007 and reached 65,438+04.5% by the end of the year. In addition, the People's Bank of China is carrying out repurchase operation, amounting to10.785 billion yuan, and another 4,057,654.38+000 billion yuan of central bank bills have been issued. Generally speaking, currency operation is several means, and the three major measures, such as raising the deposit reserve ratio, repurchase operation and issuing central bank bills, should be said to be very strong. The purpose is to recover excess liquidity. However, despite this, according to statistics, the momentum of money supply growth is still difficult to contain.

The data shows that the growth momentum of our funds has not weakened in the past three months, whether it is M2 in a broad sense, M/kloc-0 in a narrow sense or M0 in cash. In this way, we can draw the conclusion that the most direct cause of inflation this time is the excessive money supply, which is the most direct cause of this round of inflation.

The second reason, I think, is the import of overseas inflation. As we all know, after so many years of high growth in the world economy, the supply of resources around the world is very tight at present, which means that the supply of resources has brought great pressure to all countries. In other words, the growth of demand exceeds the growth of supply, and the excess capacity is also used, so inflation is rising in all countries of the world, such as Russia. In 2007, their inflation rate reached 65,438+065,438+0.9%, and the government originally planned 8%, but now it has broken through. The inflation rate in the United States is 4. 1%, which is about 3% originally stipulated by the government, and it has exceeded 1.6 percentage points. The same is true of the euro zone. Consumer prices in the euro zone rose by 3.2%, and the original target was 2%, which was a breakthrough.

From these figures, we can see that inflation is a common problem in the world now. We saw these countries. Russia is taller than us. It is particularly noteworthy that the United States, as the locomotive of the world economy, did not take effective measures in the face of inflation due to the credit crisis last year. On the contrary, it has cut interest rates several times in succession, and inflation should have raised interest rates. However, in order to overcome the subprime mortgage crisis, it has now shelved its goal of controlling inflation. Now the Federal Reserve has cut interest rates several times in a row, from 5.25% to the current 2.25%. As we all know, the currencies of many countries in East and Central Asia are pegged to the US dollar. The Fed keeps lowering interest rates, that is, adopting a loose monetary policy, which means that it has also expanded the money supply, which is bound to have an impact on these countries, that is, countries whose currencies are pegged to the US dollar, and China is one of them.

World inflation has an impact on China, especially the United States, which has cut interest rates continuously and affected China's monetary policy.

Let's analyze it more carefully. World inflation has an impact on China, especially the continuous interest rate reduction in the United States, which has an impact on China's monetary policy. Through what channels, I am here to analyze this matter with you. I think through these channels.

The first channel is that due to the huge trade surplus, our foreign exchange reserves have increased substantially. Since joining the World Trade Organization, China's foreign trade has grown rapidly, maintaining a growth rate of more than 20% for six consecutive years. Compared with the beginning of China's accession to the WTO, the scale of import and export has quadrupled. Now our import and export scale has exceeded $2 trillion, and our surplus has been rising. In 2007, our trade surplus reached $262.2 billion. Because of our trade surplus year after year, our foreign exchange reserves will inevitably increase. At the end of last year, the balance of China's foreign exchange reserves reached US$ 654.38+053 billion, a year-on-year increase of 43%. As we all know, we still implement a highly centralized management system for RMB exchange rate, that is, the foreign exchange of enterprises and commercial banks should be unconditionally transferred to the central bank, which means that every time you come in 1 billion dollars, the state will take out 700 million yuan after acquisition. So, why do I say that its imported inflation has caused us to issue too much money? What is the connection between the two? This is one of the channels. Due to the increase in foreign trade exports, the surplus has continued to rise and foreign exchange reserves have increased. After the central bank bought foreign exchange, it put in RMB. Therefore, this has caused great pressure on the implementation of our monetary policy, which is a channel.

The second channel, now international hot money keeps pouring into China. The influx of international hot money into China has two purposes: the first purpose is to make money through the spread between RMB and USD. We all know that the federal interest rate of the Federal Reserve is 2.25%. How much is our fee? Our current deposit reserve ratio is 15.5%. At the end of last year, it was 14.5%, and now it is 15.5%. The spread is so large. In this case, the hot money pouring into China can benefit from the spread. Second, it seeks benefits through RMB appreciation, because now the RMB is constantly appreciating, and we have a lot of room for appreciation. By putting money in and changing it into RMB, after the RMB appreciates, it can seek many benefits and get double profits. Profit from the trade surplus between China and the United States and profit from the appreciation of the renminbi. So we have a statistic here. For example, in October and February this year, China's foreign exchange reserves increased by 1 189 billion US dollars. During this period, that is, these two months, our trade surplus and foreign direct investment totaled $42.6 billion. Where did our new foreign exchange reserves come from? First, foreign investment; One is the trade surplus, totaling $46.2 billion. 118.9 billion where did you get it? What are the extra ones for? We said that although all the extra funds cannot be said to be hot money, most of them are hot money and have been invested. This is the second channel.

Another channel is the influx of direct investment into China. At present, China adopts a policy of encouraging foreign investors, and I think there is no limit to foreign direct investment. After the investment comes in, it may not necessarily buy fixed assets or expand production. It may use the invested company for other purposes, investing in stocks and investing in real estate. This is another channel.

In addition, we began to implement the QFII system in 2002. What is the qualified foreign investor system? The qualified foreign investor system allows foreign investors to invest in China's securities market. In this respect, it has had an impact on our securities market and foreign exchange market. Besides, it's legal. Because we have opened this market now. So this is also a major channel for the influx of hot money.

Another important channel is that we have a cooperation agreement with Hong Kong. Renminbi and Hong Kong dollars are freely convertible, and many of them enter Hong Kong. Now they buy our blue chips and many of our funds in Hong Kong, and then they come back through Hong Kong.

Another "underground money house" is in Hong Kong and Shenzhen. Underground money houses are very active. This is also an important channel for hot money to flood into China.

Through the above analysis channels, why should I take the trouble to list those facts? In other words, the current international inflation is a common phenomenon. However, in the context of global economic integration, we in China cannot be immune to it. Inflation outside China will definitely affect China. How will it be affected? I just analyzed these channels. Let's have a look. Is it difficult for you to prevent and block these channels? Therefore, although the People's Bank of China has adopted many monetary policies to recover excess liquidity, why is there still excess money after taking these measures? It's not that we want to invest too much money, but that it's hard for you not to be affected by economic globalization and inflation in many countries in the world. As you can see, these channels are difficult to prevent and block. This is the second reason, that is, the import of overseas inflation has an impact on us.

The push of cost and price is the most important and difficult kind of inflation.

Third, the push of cost and price is the most important and difficult kind of inflation. As we all know, China's economy has been growing at a high speed in the past few years. In this case of high growth, the prices of many factors of production have been distorted intentionally or unintentionally. In other words, many costs are underestimated or not included. For example, wages are low, and the wages of migrant workers have not risen for 20 years. Another example is workers' welfare, labor insurance and social insurance, which are not included and ignored, leading to our insufficient calculation of labor costs. Besides, our water is the lowest in the world, our electricity price is the lowest in the world, and our oil price is upside down now. Internationally, it is $65,438+065,438+00 a barrel, and now we only have more than $80 a barrel hanging upside down, which leads to the underestimation of our raw materials and energy costs. In addition, our land is collected by the government and supplied by the government, and the land price is low. Our interest rate is controlled, our capital price is very low, and our current pollution is very serious. Many enterprises can discharge pollutants without charging sewage charges. In fact, it is at the cost of polluting the environment, and this part of the environmental governance cost is not included in the production cost. Therefore, due to the factors I just mentioned, many of our current costs and prices are very low, lower than those in other countries. Of course, this makes our export products very competitive.

However, this situation is unsustainable and unsustainable. Because its price is distorted, the price of its production cost is not really reflected in the product. So when it reaches a certain time, it will cause a rebound. If the labor force is too low, there will be a shortage of migrant workers, and people will not work for you, forcing you to raise your salary. It is not feasible for the price of raw materials to rely on state subsidies for a long time. Now raw materials are also rising sharply. As we all know, the price of oil now exceeds $65,438 per barrel, and the price of iron ore has risen by double digits every year for two consecutive years. In April this year, Baosteel just held price negotiations with several large iron ore companies in Beto, Brazil, and the price rose by 65% this year. Besides, we have to talk about pollution control. You can no longer export goods at a low price at the expense of pollution. Therefore, for these reasons, we have to face the pressure of rising production costs and prices for a long time. And this rising production cost will also become an important factor to promote inflation.

Above, I have analyzed the reasons for the overall price increase or inflation in China from three aspects. A direct reason is money, too much money or excess liquidity, and many measures have been taken to reduce liquidity, but the effect is not very good.

The second reason is that under the background of economic globalization, we are faced with inflation in many countries in the world, and China cannot be immune to it. It will influence China through various channels.

Third, because we underestimated the prices of production factors in the past and did not take them into account, the cost and price were distorted. Now, according to the economic law, it will inevitably rebound to a certain extent and show it. Therefore, for a long time to come, we will face the pressure of rising costs and prices.

From these three aspects, we can draw the conclusion that inflation is the so-called "Rome wasn't built in a day". This is my second question.

As the direct cause of inflation is too much money, we must control the supply gate of money.

Everyone is thinking about inflation, and we can't let it go. We should take effective measures to control it. In any case, inflation is not a good thing. Because it will devalue the currency, affect people's living standards and impact the social and economic order. In a word, it will ruin the achievements of our economic construction. Therefore, inflation, especially arbitrary inflation, will not be allowed in any country. In view of the situation in China, where should we start inflation? Different people have different opinions. I'll just say what I think. Because I have analyzed the causes of inflation from the above three aspects. Therefore, I think we should solve the inflation problem from three aspects.

First of all, it controls the main gate of money supply. As the direct cause of inflation is too much money, we must control the supply gate of money. Therefore, it is correct for us to propose to implement a moderately tight monetary policy. Now I think the key is moderation. Moderately tight, not to say "one size fits all." In order to implement a tight monetary policy, neither the loans nor the financial support should be given. This will be counterproductive and will only lead us into a vicious circle of the economy. I also heard that in some places, in order to implement the tight monetary policy, the loans needed by enterprises could not be obtained, and some projects were not completed, so they had to repay the loans in advance, so enterprises immediately fell into the predicament of "cooking without rice".

Therefore, at this time, we should pay attention to the implementation of a moderately tight monetary policy, "never across the board", and you must implement this policy for specific industries, specific industries and specific products. For those enterprises with high energy consumption and high pollution, those enterprises with low labor-intensive and economic benefits, and those enterprises whose products have no market, there is no doubt that we should implement a tight monetary policy, and we should control and tighten credit, so that some enterprises may shut down and turn around, which is not a bad thing, which will optimize our industrial structure. However, for those commodities that have market supply and market demand, especially those that are in short supply at present, those products with high technology content and those competitive products, we should not only be tight, but also give strong support in credit.

Only in this way can we optimize the industrial structure, increase effective supply and lay a solid career foundation for controlling inflation. What is the purpose of controlling money by inflation? The purpose is to increase supply. When supply increases and the whole economic structure is improved, the foundation for eliminating inflation is laid, and the industrial foundation is laid.

In addition, some specific monetary policy tools should be used flexibly. Generally speaking, in order to implement tight monetary policy and control currency issuance, interest rates will be raised. However, the current deficit between China and the United States is upside down. The interest rate in the United States is very high, while our interest rate is very low, so we can raise interest rates to catch up with it, so that we can control the currency issuance. But now the interest rate in the United States is low and our interest rate is high, which originally attracted a lot of speculative international hot money. In this case, wouldn't raising interest rates further encourage hot money to enter China? Therefore, I think we should be cautious about raising interest rates.

On the surface, this price increase is a price problem, but from a deeper perspective, it is a problem of unbalanced economic structure.

The last aspect is to control factor costs and prices by means of market economy. Here, I think we should start from these aspects:

First, adjust the economic structure and increase the effective supply of goods. This time, the price rise, our inflation, on the surface, is a price problem, but from a deeper perspective, it is an imbalance in the economic structure. Why do food prices go up? Why does pork rise? Because our grain output has decreased now, why has the price of pork increased? Farmers don't want to feed pigs. Why don't they want to feed the pigs? The price of feeding pigs is too low. Feeding a pig costs several thousand yuan a year, and migrant workers go out to work for ten thousand yuan a year. Who feeds the pigs? There is also a joke circulating among farmers in Jiangsu: the price of pork is so low that whoever feeds pigs is a pig. I think the price reflects a signal that we have invested too little in this field. We should increase this investment and increase effective supply, which is the most fundamental reason and the most fundamental means to control inflation.

Second, the wages of migrant workers have been low for a long time, especially the medical insurance and social security are not directly included in the cost, resulting in "shortage of migrant workers" and "shortage of skilled workers". In view of this problem, we believe that we should constantly improve their treatment and ensure the welfare they deserve. All these will increase some costs, but we must see that this work must be completed. Only by raising their wages and salaries and giving them motivation can we make our production follow-up stronger.

Third, under the increasing pressure of energy conservation and environmental protection, the reform of the price formation mechanism of resources and environment should be promoted at present. Why should we propose to reform the price formation mechanism of resources and environment? In other words, in the past, we didn't get involved in this aspect. We discharged sewage into the river, discharged waste gas into the air, and dumped garbage outside. We didn't charge him any fees, so the products could maintain the competitive advantage of low price, but what was the result? As a result, our living environment has been destroyed, at the expense of the environment. Now, a slogan has been put forward, that is, "it is necessary to have Jinshan Yinshan and green mountains and green hills." This reflects people's wishes. In this regard, we should consider the environmental protection price that was not included in the cost in the past. It seems that your cost has increased a little, but your economic development is sustainable. Therefore, we should see that we are talking about controlling inflation and preventing price increases. However, beyond that, Mr. Zhou said that it seems contradictory to raise the wages of migrant workers and restore distorted prices. In fact, the two are closely related. What is the root cause of inflation? In fact, it is unbalanced supply, unbalanced supply and demand, and insufficient supply. The supply is insufficient. In this case, if we control the price in this way now, I don't think it is a good way, it will only return to the old road of planned economy. If the price control method is used, the result will only be counterproductive and will only aggravate the product gap. The farmer said that if I feed pigs, the feed price will go up and everything else will go up. Why doesn't pork go up? I don't do it, I don't plant it, I don't raise pigs. Fertilizer has gone up, seeds have gone up, and pesticides have gone up. Why don't food prices go up? Then I won't grow grain, and the food supply will be even less? Isn't the pressure even greater? So the price can't be controlled like this. It should be said that the price increase is also a price signal, which conveys a signal. According to this signal, we respect the law of price. We should increase investment in these fields and increase the effective supply of these products, so as to narrow and eliminate the gap between supply and demand. This is the fundamental solution. You can't treat the symptoms but not the root cause, so we suggest inflation, raising the wages of migrant workers and raising the prices of pork and grain.

In addition, I think we should adopt a flexible exchange rate policy to appropriately accelerate the pace of RMB appreciation. It should be noted that our currency is still undervalued, especially in the current depreciation of the US dollar, and the value of our RMB is seriously undervalued. In the past, we thought that undervalued RMB was beneficial to exports, but now exports are growing too fast, which has brought us many problems, including the problems we just analyzed. On the one hand, the appreciation of RMB will increase our export cost, which will help to eliminate the pressure brought by the expansion of export demand. On the other hand, we can reduce the import cost. Because the RMB has appreciated, imported goods are cheaper, which reduces the pressure of price increase brought by imported oil and raw materials.

Therefore, from these two aspects, the pressure brought by our rising costs and prices can be appropriately eliminated. Of course, RMB appreciation is also a very complicated issue, which is not the topic we are going to talk about today. We are also very clear now that we should form a flexible and flexible exchange rate management system based on market supply and demand. Of course, there is also a process here. It is impossible for RMB to appreciate in one step, because we still have to consider the pressure that export enterprises can bear. I advocate gradual progress, not one step at a time. Of course, your gradual appreciation will also bring negative effects, which will attract the continuous influx of hot money, which requires greater efforts in financial supervision.

In short, I have talked about some views on controlling inflation, especially the third aspect, that is, how to control factor costs by means of market economy. There must be some ideas here that everyone sounds a little incomprehensible. On the one hand, you said that inflation should be eliminated. On the other hand, why are food prices, meat prices and wages of migrant workers rising all the time? It seems incredible. In fact, only by solving these problems can we lay a solid foundation for eliminating inflation. I think this is the characteristic of Chinese inflation control.