Inflation Is Unlikely Next Year in China: Blue Paper

In the latest published economic blue paper, "2001 China: Economic Situation Analysis and Forecasts", many authoritative Chinese experts expressed in an article their views that an inflationary phenomenon will not necessarily emerge in China next year. In 2001, economic restructuring will outweigh the expansion of economic aggregate, ruling out the possibility of a rapidly heating up of the economy.

The blue paper analyzes that since the latter half of 1997, China has witnessed a negative price hike. In 2000, the inertia of the negative price rise still remains. In its macro-policy, the government continues to pursue a pro-active fiscal policy and, at the same time, calls for a full play to the role of a stabilized monetary policy and a delay of implementing related consumption reform measures that will restrain the current consumption. According to the statistics of the first three quarters of 2000, the current macroeconomic operation has basically entered a state of "zero-inflation and high growth", basically eliminating the situation of the negative price rise.

That was followed by a substantial increase in the stock of money, then, will the inflation occurred several years ago repeat itself in 2001? According to the blue paper, this situation will not necessarily occur.. In 2001, as economic restructuring will outweigh the expansion of economic aggregate, it is barely possible for a rapidly heating up economy to occur.

The blue paper draws its conclusion on this basis: are: in the aspect of demand, firstly, future investment will slow down; secondly, the consumption will maintain the momentum of steady growth; finally, the scale of trade surplus will continue to decline.

Viewed from the general trend of the macroeconomic development, the macro-economy in 2001 will remain in the state of a steady development. The economic growth is expected to fluctuate on a fairly high platform, standing at a growth rate of 7.5 percent to 8.5 percent. Under such circumstances, a basic balance between total supply and total demand can be achieved.



By PD Online staff member Du Minghua


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