Mid And Long-Term Inflation Worries, 12Th Five-Year CPI Target Can Be Relaxed To 5%

"At present

The establishment of the "12th Five-Year plan" has reached a critical moment. The main agenda for next year's the fifth Plenary Session of the 17th CPC Central Committee session of the Communist Party of China is to hear, discuss and deliberate the adoption of the recommendations of the CPC Central Committee on the Twelfth Five Year Plan for national economic development and social development. In the next five years, accelerating the pformation of the mode of economic growth will become the main keynote, which also puts forward new requirements for the goals and means of macroeconomic regulation and control.

"Recently, we are doing some research on the development of China's economy in the 12th Five-Year.

In his view, taking into account the changes in the international economic situation, the GDP growth rate can also be as low as 8% during the "12th Five-Year" period, while CPI can be as high as 5%.

5% tolerable for individual years

China

During this year's "two sessions", Premier Wen Jiabao of the State Council put forward in the government work report that this year's CPI increase is controlled at around 3%, and 3% is also regarded as a warning line for judging inflation by the outside world.

"CPI is close to 5%. I think it can be tolerated. Considering that the international economic situation is changing, CPI may reach 5% in individual years, and it does not mean that it will reach 5%."

Zhu Baoliang explained.

Since the end of the year, the State Council and the central bank have repeatedly stressed that this year we should deal well with the relationship between maintaining stable and rapid economic development, adjusting the economic structure and managing inflation expectations.

Once inflation control target is raised to 5%, it means that monetary policy and fiscal policy have more room for operation.

"During 12th Five-Year, inflation can be tolerated between 3%-5%. Under such a big background, monetary policy is moderately relaxed. Next year's fiscal policy can continue to be positive."

Zhu Baoliang stressed that the direction of fiscal policy should be changed. Now, from the infrastructure, real estate construction and pfer to rural governance, energy conservation and emission reduction and promoting the reform of state-owned enterprises, private enterprises will become the focus of economic growth.

Middle and long-term inflation worries

"China has had a process of excessive liquidity release since last year. The release of a large amount of money will have a great impact on the -10 in the next 5 years. It will take some time to digest the sequelae of excessive monetary release to the economy.

This is a systematic problem, not a problem that can be solved simply. "

Zhou Jintao, executive general manager of CITIC research and development department, said.

CPI rose 3.5% in August, a record high this year. Although it is widely expected that the three quarter will be the peak of CPI this year, it still raises concerns about interest rate hikes in the market.

Although the local economy is overheating at present, the future grain price rise is expected to remain in a reasonable space after regulation and control measures such as purchase and storage and auctions. Because of the fierce competition in the industrial market, prices will also have a certain downward trend, and the import price of commodities will probably rise again in the next three or four months.

Despite the possibility of hyperinflation in the short run, inflation remains hidden in the long run.

Data released by the central bank in September 11th showed that China's broad money supply M2 growth rate rebounded in August.

"In August, China's M2 reached 68 trillion and 700 billion, while the current US M2 is US $8 trillion and 600 billion, equivalent to about 58 trillion yuan, and China's M2 exceeds US 10 trillion yuan."

Guotai Junan Securities chief economist Li Xunlei said.

During the "12th Five-Year" period, there are many uncertain factors affecting China's CPI. Among them, import inflation and agricultural price fluctuation should be the most important ones.