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Owner of a pork booth in a food market plays his phone in Chaoyang district, Beijing, July 9, 2015. [Wei Xiaochen / China Daily] |
According to official data, the national consumer price index for August, an indicator of inflation, has risen above 2 percent, for the first time in the past 14 months. While the producer price index, a barometer of the manufacturing industry, remains below zero. Comments:
A more detailed analysis of the data shows that pork and fresh vegetables, two major foods, have pushed the consumer price index higher by 1.05 percentage points, while the index without such foods remains 1.1 percent, the same as last month. However, the producer price index continues to fall, which sends a warning about a possible decline in industries. Therefore it is too early to assert that China faces inflation. On the contrary, the economy remains weak and needs more proactive financial measures.
Ma Guanyuan, economist and deputy director of the China National Democratic Construction Association's economic committee, Sept 13
Theoretically, the government's monetary policy is loose enough; however in reality the market still faces inadequate liquidity, with many enterprises complaining about the lack of liquidity. The problem lies in bureaucratic procedures and high trading costs that have hindered funds from flowing to the real economy. Instead of further loosening monetary policy, the government needs to reform its financial regulations and allow money to flow more freely.
Beijing News, Sept 11
The high consumer price index should remind us to look at the central bank's move of reducing deposit interest rates two weeks ago. Obviously, it hopes to "stimulate" the economy by discouraging people from saving money in the bank and encouraging them to consume. The problem is, the low interest rates are no guarantee of better liquidity in the market. With an increasing number of people willing to buy properties or stocks, banks will soon find themselves without deposited money to lend out, which is hardly a positive signal for the economy.
Beijing Youth Daily, Sept 12
