Andy Xie: Current monetary policy will lead to higher inflation

Photo 01: Warns Xiang Songzuo told reporters, CPI and PPI both fall double drop means that the economy continues to weaken, in warns Xiang Songzuo view, CPI and PPI is only a very one-sided or incomplete reference, then what we want to see, we have to look at asset prices, stocks, real estate, money supply,　　Commodity movements should be closely watched asset prices. Photo 02: Economist Hu That statistics released from other countries around the world suggest that the main risk for the global economy, not just China, including Europe and the US, is insufficient demand and overcapacity, if at this time the premature adjustment of policy, from the prevention of deflation and recession into anti inflation,　　Then it will produce very unfortunate results.　　Picture 03: The Economist Andy Xie points out that if money were to increase at 25% such a rate, a few months would be possible, but for a year or more, that would be the inevitable consequence of higher inflation, so it would be prudent to put a lot of money in China's monetary policy. Photo 04: How should China's macroeconomic policies be regulated when deflation is at the same time worrying about inflationary pressures? In this case, Mundell put forward his own view: "We should prevent deflation, through more expansionary monetary policy." May Data announcement: expert debate monetary policy (editor-in-chief: Mengqing: Sun Yu, Kangjing, 付豫, Liu Ying is photography: Baiyu, Goncon, Zhang Xiaoming, 刘勋) in recent time, the international commodity performance, New York crude oil futures price yesterday in 70 dollars per barrel, from the bottom of more than 30 dollars has been doubled　　, copper, aluminum and so on have also soared, while the capital markets, the global stock market is also a big rally, the A-share market in May, the main index of the general increase of more than 5%, in the turmoil even a rebound since the new highs. May looks booming, so what about our real economy?　　Today, the National Bureau of Statistics released its high-profile May macroeconomic data, and we are all concerned. Fred Six: Now there is a very unfortunate result of anti inflation. This morning, the National Bureau of Statistics announced that China's consumer price index in May fell 1.4% from a year earlier, falling for the fourth consecutive month.　　Meanwhile, the May producer price index (PPI) fell 7.2% from a year earlier, falling for the sixth consecutive month, with the economy still not optimistic, and China's sluggish economy and weak demand still cpippi, compared with April's 1.5% and 6.6% respectively. Warns Xiang Songzuo: "CPI and PPI negative, double negative for four consecutive months, it shows that our real economy has not yet returned to the normal growth trajectory, which means we have to protect the real economy this year, the task is very very difficult, one of our biggest difficulties, our exports have fallen very badly, And exports will be further down, then the further decline in exports, will cause a lot of our unemployed people, this will be a very big economy for ChinaA problem. "warns Xiang Songzuo told reporters that both the CPI and PPI decline mean that the economy continues to weaken, but in these few months, we also saw a different picture from the market." From the end of October 2008, the Chinese stock market Jedi counterattack, out of the 7-month rally. As the stock market rose, the international gold price all the way higher, the impact of the 1000 dollar pass, crude oil prices to create a rebound price of 70 U.S. dollars/barrel of new highs, international copper prices in the last 6 months has been out of the steep rise in the market. The rise in commodity prices gives a good signal to the economy. There is a divergence between data and phenomena. Is there a false element in the CPI data statistics? So how is China's CPI data released?　　In Xuanwu District, Beijing, reporters interviewed the statistics bureau of the price collection personnel. "How much is the ridge?" "Every five days, Hou Jianhua will come to this noisy pottery market, in accordance with the Beijing Bureau of Statistics strictly set the list of prices for each inquiry."　　The reporter noted that the same meat product, Hou Jianhua at least ask three or four stalls to write down the price. "For example, meat is 10 yuan recently, there may be three stalls are selling 10 yuan, there is a booth because of sales of 9 yuan, we need to collect the three booth, that is, 10 yuan price." "Throughout the Xuanwu District Statistical Office, there are 10 staff members, such as Hou Jianhua, who specialize in price-picking." There are 3000 price-collecting agents nationwide.　　Reporters noted that, in order to sample the fair, they do not care about the price of the front of the vegetable stalls, but personally asked. "Still ask, there is difference, can be a few cents." "Economic and social investigation in Xuanwu District, Beijing vice-captain Captain Ammo:" We Xuanwu District has 62 sampling points, more than 1700 varieties, we have 8 streets, all kinds of points have. "In the country, like Xuanwu District, such as the sampling point nearly 50,000, covering more than 550 counties and cities, involving food, clothing, health care, such as the eight categories, 262 basic categories."　　Although the CPI statistics are complex and meticulous, in the eyes of warns Xiang Songzuo, CPI is not a scientific indicator of the economic performance. Warns Xiang Songzuo: "CPI and PPI is a very one-sided or incomplete reference, so what we want to see, we have to look at asset prices."　　"in warns Xiang Songzuo's view, stocks, real estate, money supply, and commodity movements should be closely watched asset prices." Warns Xiang Songzuo: "One of my basic judgments is that the US is bound to get into an inflationary situation soon, so China's judgment, my basic judgment, my judgment, is that China's deflation will soon pass and inflation is coming." "Reporter:" I also noticed that another index is PMI, the procurement of economic people index, these indices are often mentioned, it is maintained in 50%, the economy is in normal operation, the Chinese economy in November 2008 reached a low point of 38% points, then now gradually rebound, Now it seems to be running to the boundary of the bull BearLine, you have just said that China's exports are still very serious, from this point of view, the relationship between the two you let us see? "Warns Xiang Songzuo:" This shows that our 4 trillion investment drive, including a lot of investment-driven planning by our local governments, is really playing a role, because it's an index that reflects mainly on raw materials, including other purchases of machinery and equipment, which has been very active, It shows that we are investing in this, the increase in investment is gradually recovering and accelerating recovery, so I think this may be a better signal for China's economy. "Since this year, the domestic demand for expansion and growth policy measures have begun to play a positive effect, some economic indicators have also shown signs of stabilisation, but overall, as the economic recession in advanced economies such as Europe, America and Japan continues, global demand remains sluggish, and the negative impact of the international financial crisis on the real economy is still growing.　　Contrary to warns Xiang Songzuo's optimism, there are also economists who believe that CPI and PPI have fallen for four consecutive months, suggesting that the danger of deflation is increasing. Hu told us that the May CPI and PPI both fell, entirely within his expectation.　　He believes that in the current global economic downturn, the backdrop of declining demand, domestic price levels will continue to decline. Economist Fred Six: "So although China's economy through large-scale fiscal stimulus and monetary easing policy, then from the first quarter, we have this initial rebound and recovery, but overall, the Chinese economy is still in such a grim reality, most of the industry, overcapacity or lack of demand, So this is the root cause of the continued decline in price levels.　　"In recent months, global commodity prices have risen sharply, particularly in commodities such as oil, steel and gold, but in Hu's view, despite signs of a sharp rebound in prices for commodities such as international crude, gold and steel, there has been no fundamental change in overall price levels. Fred six: "Commodity commodities include iron ore and other prices, the market has rebounded in the last month or two, but it is still at a low level from the peak of history, so in general, the prices of these primary products have not rebounded to the price of final product services.　　"According to Hu, statistics released from other countries around the world show that the main risk for the global economy, not just China, including Europe and the US, is insufficient demand and overcapacity, and preventing deflation is the main task of current economic policy." Fred Six: "In this environment, the risk of inflation is very low, that is, in the foreseeable future, inflation may not be the main focus of the policy, now or even in the next year or two, but in the medium term we should not be complacent, but the immediate priority is to prevent deflation, is to stimulate the global economic recovery, including the recovery of our Chinese economy. ”[Page] holds the same view of JPMorgan's Greater China chief economist Frank Gong and professor Song guoqing of Peking University's China Economic Research Center. Frank Gong said recently that deflation is a more prominent risk for China both in the near and medium term, with CPI expected to fall by 0.5% in the year to 2009, and two more 27-point cuts this year. Professor Song guoqing that, as early as October 2008 or so, our country has entered deflation, and is a serious deflation.　　They agree that the current economic policy cannot be changed because of worries about inflation. Fred Six: "If at this time, the premature adjustment of policy, from the prevention of deflation and recession into anti inflation, then I think it will produce very unfortunate results." Hu finally told us that since last year, China has launched a series of macroeconomic stimulus policies, including the central bank to cut interest rates, increase the money supply and so on, but in the implementation of these policies, but also pay attention to prevent because credit policy is too loose, leading to large sums of money into the stock market and real estate We need to be concerned about not because of these loose policies, in particular, a lot of liquidity does not lead to a potential, I say, a stock market or a housing bubble, before the economy, the real economic recovery, has not been fully entrenched, before many of our corporate profits have improved dramatically. This I think is a risk, we should pay attention to. "Andy Xie: The current monetary policy will lead to higher inflation on the one hand, the international financial crisis has led to inadequate external demand, weak growth, on the other hand, positive fiscal policy and moderately loose monetary policy has shown a pulling role." Under the influence of these two forces, the current Chinese economy has a complex face, CPI, PPI continued to decline and capital goods, commodity prices accompanied by higher.　　It also gives the economic circles a different voice on how to judge the next trend of macro-economy, and let's listen to another view. 2008, the financial crisis swept the world, China's economy is also facing unprecedented challenges, in order to successfully withstand the crisis, China's macro-control policy made a major adjustment, the central bank in December 2008 to determine the implementation of a "moderately loose monetary policy", such a reference in the history of China's macro-control is still the And looking at the central bank's monetary policy memorabilia this year, it is true that the central bank did not use traditional monetary policy instruments such as interest rates and reserve requirements; the only move was to let go of the money faucet. And from the first quarter of the published economic data, it appears that the positive changes in national economic performance are obvious.　　The industry generally believes that the Chinese economy has been able to perform well, the implementation of moderately easy monetary policy brought about by the liquidity. Tu Guangshao Vice-Chairman: "It should be said that our current economy in Shanghai is beginning to show some good trends, and we feel that this is also due to a moderately loose monetary policy." "As a result of the financial tsunami, the global credit crunch, financial market liquidity suddenly dried up, so the world's central banks have to showA concerted move to ease monetary policy, and the trend is growing, the tsunami center of the United States to release liquidity in the market, March 19, 2009, the United States is also a printing machine, announced that in the next few months to buy 300 billion U.S. dollars in long-term U.S. Treasury bonds and up to 1.25 trillion U.S. dollars "two rooms" Mortgage-backed securities issued, almost at the same time, the central banks of Japan, Germany and Britain have also bought bonds and increased the money supply in financial markets. The ECB's base currency rose 22.9% in the first quarter of this year, with many economists thinking that a large increase in the dollar, non-US dollar money supply and associated liquidity would increase the risk of inflation and asset price bubbles.　　Prof Stiglitz, a professor at Columbia University and Nobel laureate in economics, gave his opinion to reporters. "As long as there is a lot of credit in a short time, if the credit is not well allocated, there is always a risk that it is hard to control the potential risk," Stiglitz said. In China, in addition to sharp interest rate cuts, China has also instructed commercial banks to issue large amounts of loans. The central bank data show that in the 1 quarter of 2009, the renminbi new loans amounted to 4.6 trillion yuan, an increase of 3.2 trillion. In the first 4 months of this year, new loans were up to 5.2 trillion yuan, more than the year's credit plan. And now the money growth rate has been more than 25%.　　In this respect, many economists pointed out that the possible inflationary pressure should be prevented. Xu Xiaonian: "I think it is not a moderately loose monetary policy, it is a very loose monetary policy." "Ha:" 25.5% of the money growth rate and 3.6% of private GDP growth, the difference is too big, I think it is necessary to do some fine-tuning. "The China Monetary Policy executive Report, released by the PBoC in the first quarter of 2009, also noted that aggressive monetary policy in the major economies prompted further easing of global monetary conditions, saying that" if the central bank fails to recover huge amounts of liquidity in time for the recovery, it could again bury the asset bubble and inflation risks. " "China's consumer price index has been negative since February this year, but the year-on-year increase in CPI will return positive after the price-cutting factor disappears," said economist Andy Xie. After this, with the increase in the price of energy and raw materials and the steady decline of the global economy, with the stimulus of liquidity flooding, the gradual expansion of the CPI in China is likely to evolve into a cost-driven inflation based on input mode.　　The impact on prices of staggering bank loans, rampant liquidity and excessive lending should be heeded and taken early precautions. Andy Xie: "I think China's monetary policy should be, now that it's tightened, if it's a 25% increase in money, I think it's possible to have a few months, but for a year or more, that's the inevitable consequence of higher inflation, so in terms of China's monetary policy, It should be prudent to put a large amount of money. "MengDyer: China needs more expansionary monetary policy after the rapid expansion of credit scale, can we keep the supply of funds in time to prevent a new round of asset bubbles and inflation? Become the focus of the economic circles. In the face of macroeconomic performance, just a few economists have different judgments, which is precisely proof that the current Chinese economy is in a delicate situation, both risks and opportunities can not be ignored.　　We also interviewed the famous economist and Nobel laureate Mundell to hear the analysis of the father of the euro. Data released this morning by the National Bureau of Statistics show that the May CPI index fell 1.4%, in fact, as early as the May economic data is about to be released, there are many institutions forecast, CPI, PPI Two index will still appear both decline, perennial focus on the Chinese economy Nobel laureate-　　Mundell argues that there is no need to worry about the slide in data. Winner of the Nobel Prize in Economics, Robert Mundell: While the rest of the world is facing huge economic retrograde pressures, I don't think it's an unexpected decline in the data, which initially looks like a lot of China's economic data should rise sharply, but I don't think that many people would expect this ( As the data rebound continues, China's economy has grown strongly from the past, running to the downside of the present, China is unlikely to flee the global economic downturn, but of course, I say so does not mean that the Chinese economy has come to a negative, production decline, I said in the general sense of China's economic growth rate slowed, In stark contrast to previous strong growth.　　"In the 2009, China's CPI index continued to decline, while the money supply is increasing, so in the recent period of time, many economists worry that such a large amount of liquidity will be the next operation of the Chinese economy to bury the curse of inflation, which Mundell also disagree." Robert Mundell: "China needs more expansionary monetary policy, and in order to achieve this, the Fed and the people's bank need to increase the amount of money they buy, often by buying more things, such as bonds, or by adjusting statutory reserves." "Facing deflation and worrying about inflationary pressures, how should China's macroeconomic policies be regulated?"　　In this respect, Mundell put forward his own opinion. Robert Mundell: "We should prevent deflation, one of the ways to pass a more expansionary monetary policy is to stop buying too much of US Treasuries and China should not invest in US Treasuries, because the Chinese need to keep their money and keep the renminbi at home, they need money to spend, they need to maintain their economies and leave their money in China, Let the Chinese consume a little more, the Chinese consume more, the Chinese economy will be better, thus offsetting the effect of deflation, and pulling the price level back to the growth rate of 2% or 3% per annum. "In fact, the world economy is also facing the dilemma of controlling inflation or deflation, and the global real economy is stillDownturn, but the prices of various assets have soared sharply, and this anomaly, Mundell also analyzed. Robert Mundell: "Obviously, prices are rising, before they were down, two years ago, world oil prices were about 60 to 70 dollars a barrel, up to nearly 150 dollars a barrel, and now prices are staggering, largely because the Fed tightened monetary policy last summer, Let the dollar appreciate, the dollar is relative to other than the renminbi appreciation, because at that time, the renminbi fixed, maintained at 6.8:1 level, the dollar price rises, so the price of raw materials, oil prices fell, resulting in deflation, now, the dollar depreciation, so other prices rebound, so say, Oil prices are directly related to the dollar, when the dollar falls, oil prices rise, other prices rise, and when the dollar appreciates, other prices fall, and everything depends on the Fed's monetary policy. "Mundell argues that the depreciation of the dollar is the leading cause of the current international market and the rise in commodity prices such as metals, and this is not a sign that the international economy has improved or bottomed out.　　But for the current bewildering economic situation and the trend of the world economy in the coming period, Mundell has made his own predictions. Robert Mundell: "I think the world economy is bottoming out, down to the bottom, and it's going to bottom, and I think that even if it's not yet bottomed out, it will hit bottom in the next few months, followed by a very slow economic recovery." "Half an hour observation: the healthy growth rate is crucial in front of the show, we see that the current economic situation in China, although there are some signs of warming, but the overall economy is still grim."　　The narrowing of the CPI and PPI declines suggests that deflationary pressures are shrinking, and the recent "sudden boom" in commodities and the good housing market have meant that the risk of inflation is growing and deserves high attention. In fact, in our view, deflation and inflation are a process that is not completely separate.　　In fact, in our world, there has always been inflation and deflation in any crisis, and the Chinese economy has been experiencing the cycle of inflation and deflation in the past. In our view, the domestic economic growth rate is the key to the future, the Chinese economy if the recovery is too fast, it is not necessarily a good thing, in excess of liquidity, from deflation to inflation may be very fast. What we want is a sound economy, a slump that is not conducive to long-term development.