Some Westerners claim that China is exporting inflation to the world

Some recent Westerners' arguments that “China is exporting inflation to the world” are too illusory; it is appropriate to say that China is a victim of global inflation.

As global inflationary pressures have become increasingly prominent, some Western analysts have pointed out that the United States’ “quantitative easing” is not the only issue. The introduction of more than two years of moderately loose monetary policy has forced other emerging economies into inflationary plights. one of the reasons.

They also said that in the next five years, the Chinese economy, which still has strong momentum, continued improvement in the wages of Chinese workers, and adjustments in the prices of other factors of production will aggravate global inflationary pressures.

The CPPCC members who are preparing to attend the Fourth Session of the 11th National People's Political Consultative Conference and some economists in Beijing said: "This is a new distortion and misreading of the Chinese economy by some people in the West, which is inconsistent with the facts."

Since mid-January of this year, international oil prices have risen rapidly. On February 24, the oil price in the New York market broke $103 a barrel, and the London oil price reached $119.79 a barrel. Other important commodity prices have also soared. They further exacerbated global inflation pressures and boosted global inflation expectations.

Li Daokui, a member of the National Committee of the Chinese People's Political Consultative Conference and a member of the Central Bank’s Monetary Policy Committee, pointed out that an important source of the recent rising prices of international commodities is the depreciation of the U.S. dollar caused by the Fed’s two quantitative easing policies and the monetary policy of other advanced economies with low interest rates. . They are important drivers of current global inflationary pressures.

Over the past two years or more, in response to the international financial crisis, China has implemented a moderately loose monetary policy, adding more than 18 trillion yuan of new credit, which, while stimulating the rapid recovery of the country’s economy, has also contributed greatly to the global economy’s response to the crisis. .

"As we all know, the renminbi is not yet a global reserve currency and it is unlikely to affect the international market prices and global financial markets as deeply as the US dollar," said Guo Tianyong, director of the China Banking Research Center at the Central University of Finance and Economics.

At the outset of the international financial crisis, the Chinese government quickly announced a package plan represented by 4 trillion yuan of investment. David McCormick, who was then Vice Minister of the United States Department of the Treasury, said that China’s stimulus economic plan is expected to promote the growth of domestic demand in China and will also benefit other countries. The report of the US Bloomberg News also pointed out that China’s economic stimulus plan supports the growth of the global economy when the United States, Europe, and Japan are struggling on the edge of the recession...

The data shows that for the first time in 2009, when the global economy experienced negative growth for the first time in decades, China’s contribution to world economic growth exceeded 50%, and its contribution to economic growth was even higher than that of the three major economies of the United States, the European Union, and Japan. Big, it becomes a real world economic engine. In 2010, China’s contribution to the world economy was as high as 30%.

Since 2009, the total scale of the two rounds of “quantitative easing” launched by the Fed has exceeded two trillion US dollars. Due to the economic downturn, low returns, and the depreciation of the U.S. dollar, these scathing amounts of money are difficult to do in the United States and can only flow to emerging market countries with more returns and development potential.

“The excess global liquidity will on the one hand increase international commodity prices and increase the pressure of imported inflation facing emerging market countries; on the other hand, it will also accelerate the inflow of hot money, increase the excess liquidity in emerging market countries, and boost assets. Bubbles increase inflationary pressures, said Zhang Xiaojing, director of the Macroeconomic Department of the Institute of Economics at the Chinese Academy of Social Sciences.

In order to ease inflationary pressures, emerging market countries have announced interest rate hikes. However, under the premise that the US “faucet” is not closed, the enlarged interest rate will only attract more hot money inflows, and the effect of raising interest rates will be offset to a considerable extent. Controlled inflation efforts in emerging market countries such as China face a dilemma.

Chen Fengying, director of the Institute of World Economics at the Institute of Contemporary International Relations in China, said that some people in the West have recently spread the argument that “China exports inflation”, in order to shift people’s attention and avoid the responsibility of their country. "As a member of emerging market countries, China was originally a victim of low interest rate policies in the United States and Europe. Now it is shaped by guiding public opinion as an injurer. It is really a cart before the horse."

The Chinese government is taking comprehensive measures to control inflation. Most analysts believe that from the perspective of supply, because China's current price rise is moderate and controllable, and there will be no hyperinflation, it will naturally not bring about the consequences of global inflation.

Yao Jingyuan, chief economist of the National Bureau of Statistics of China, said recently that there are currently two material conditions that will determine China will not experience hyperinflation: First, grain has been harvested for seven consecutive years, grain prices have remained stable at a steady price, and the second is a basic balance between supply and demand in the industrial product market. Some industries also have excess capacity.

In addition, since foreign-dominated processing trade is a major component of China's current trade surplus, a large part of the increase in the prices of final export products comes from rising prices of imported intermediate products, and this part of the rising factor “China cannot control”.

Since the mid-1990s, China has shifted from a net exporter of primary products and a net importer of manufactured goods to a net importer of primary products. Imports of primary products have been rising year after year. At present, China is the world's largest source of energy consumption for iron ore, alumina, and copper, and is the second largest oil importer in the world after the United States.

At present, China's rising prices, in addition to the impact of imported inflation, also include factors such as rising labor costs and appreciation of the renminbi. Chen Fengying pointed out that rising labor costs are an active manifestation of China’s accelerated economic transformation and are also conducive to improving China’s trade imbalance. This is not a bad thing for the world economy.

"The appreciation of the renminbi is not something that the West is willing to see?" said Chen Fengying.

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