China's State Council reports that a situation may arise in the future of inflation alternate repeatedly

October 26, the Fifth Session of the 11th NPC Standing Committee meeting on the 26th listen to the People's Bank of China Governor Zhou Xiaochuan made by the State Council on strengthening the financial macro-control situation. Zhou Xiaochuan, in the report talked about the current financial macro-control of the main problems facing pointed out that the apparent global economic slowdown may affect China's exports, China will pay close attention to the situation and its changes in the price. Report also pointed out that inflation in the future there might be the turn of the situation and repeatedly.
Zhou Xiaochuan, the report pointed out that the recent turmoil in international financial markets, global economic growth is slowing down, uncertainty in the international economic environment uncertainty increased, the domestic economy there are still some outstanding contradictions and problems. This is an increase in the future to determine the economic and price trends, economic growth and inflation to grasp the relationship between the difficulty of macro-control to face a more complex situation.
The report from the following two points were:
(A) the global economic slow down significantly, which may affect China's exports
Recently, the U.S. government to take over the "two rooms" and the American International Group, the top five firms have cast changes, bankruptcy Washington Mutual Bank, Wachovia crisis and a series of events, shows that the United States sub-loan crisis has evolved into a financial crisis. Crisis quickly spread to Europe and even the world, Fortis Group, the German real estate mortgage financing bank, Unicredito, Italy, United Kingdom Bradford - Bentley Bank, Iceland's financial system as a whole, and other crisis. Although the United States has adopted 700,000,000,000 U.S. dollars "in 2008 emergency economic stability bill," the major central banks to the huge amount of liquidity into the market, European countries have also announced that private deposits to improve security or provide an unlimited amount of security, but did not ease the credit crunch, The world's major stock market shock is still low, the international foreign exchange markets also wide oscillation, indicating investors still lack confidence.
Affected by this, the United States as well as the global real economy could be larger negative impact, and may be longer adjustment period. The United States in August and the unemployment rate rose in September 2003, the highest since 6.1 percent, indicating the U.S. economy is rapidly weakening trend. European economic downturn, the euro zone in the second quarter of investment, consumption and exports declined at the same time, leading to quarter economic contraction of 0.2% for the euro for the first time since the birth of negative growth. Japan's economy may be entering a new round of recession in the second quarter GDP ratio declined 0.7 percent, the discount rate fell 3%. In this context, the decline in export growth in Asia, the gradual economic slowdown, the massive outflow of capital. IMF this year and next year has been the recent world economic growth forecast from 4.1 percent before and 3.9% to 3.9% and 3.0%. WTO predicts growth in global trade this year may be reduced to the lowest level since 2002.
At present, China's external economic dependence on higher global economic slowdown and the resulting weakening of external demand for China's economic development will inevitably have a negative impact.
(B) pay close attention to price changes in the situation
At present, work to stabilize prices is faced with a complex situation. There economy may cause inflation of the cost-push factors, there are persistent price drop may be. Therefore, the policy needs to take special care.
The current inflationary pressure comes mainly from cost-push factors. Internationally, loan-to-time by the crisis, a growing number of economies, the policy focus from curbing inflation to increase security. In the relatively easy monetary conditions, once the market to restore confidence in international commodity prices might regain rise. In addition, with China, India, Brazil, and other big developing countries to speed up the industrialization process, resources and elements of the emerging trend of price increases may still exist. Domestically, there are also strong wage and cost increases are expected. September PPI increase was still as high as 9.1 percent, agricultural production materials prices rose as high as 22.9 percent, consumer prices have further to the conduction of the pressure.
However, if the global economic slowdown, international commodity prices decline significantly, the CPI and PPI up to promote the external force will become weaker. Recently, New York crude price fell to around 80 U.S. dollars. International coal prices last month fell nearly 25%. This means that China's inflation situation, there will be a lot of uncertainty. In April 2008, China's CPI down step by step. Food prices in September there have been rare in the history of the ring than the decline, to a certain extent, this also shows the current power prices are down. On the whole, the inflation situation in the future likely to be repeated and the turn.