Commentary: Deflation or ending economic recovery chill

May CPI, PPI continued to double the year-on-year increase in PPI although in mid-April, the National Bureau of Statistics spokesman Xiaochao in the analysis of the first quarter of data, said: "Spring has been the same."　　"But the May data still make people feel chill. The consumer price index fell by 1.4% in May from a year earlier, down from 1.5% in April to a fourth consecutive month, according to data from the National Bureau of Statistics yesterday.　　Meanwhile, the producer price index (PPI) fell 7.2% in May from a year earlier, down from 6.6% in April, down for the sixth consecutive month. Industry insiders said that the upstream and downstream price index continued to decline, indicating a sluggish economy and weak demand is still continuing.　　The head of the National Bureau of Statistics also said that despite the various policy measures taken by countries to deal with the financial crisis, some economic indicators showed signs of decline, but overall the recession in major economies continued and global demand remained sluggish. "About CPI" data: down 1.4% month-on-month decline 0.3% optimistic view: Deflation or the end of the current overall price situation has not changed, is still low, indicating that relative to China's economic growth or supply capacity, demand is still inadequate. "Zhang Liqun, a researcher at the macroeconomic Department of the State Council's Development Research Center, said in an interview. The National Bureau of Statistics, for the first time in its monthly data, reported core CPI ——— fell 1.3% per cent in May, down 0.1% from last month.　　After discounting more volatile foods and energy prices that are susceptible to international market hype, the drop in core CPI is enough to show that prices are low at the moment. Yuan Gangming, a researcher at the Institute of Economic Studies at the Chinese Academy of Social Sciences, said in an interview that the data had exceeded his expectations and that, in Yuan Gangming's view, this month's CPI data should be a reasonable range of about 1%. Yuan Gangming told reporters, "the CPI downward trend may continue, still cannot judge already in the end."　　"The original market expected CPI to be positive in 8 September, it seems unlikely to be achieved at the moment, and may even remain negative throughout the year." It is noteworthy that, although the CPI four consecutive months of negative growth, but the year-on-year decline narrowed slightly. May CPI fell 1.4% Year-on-year, the chain fell 0.3%. Compared with April, the year-on-year decline shrank by 0.1% and the chain fell by 0.1%. In the view of some optimists, the fall in the CPI has come to an end. Li, director of the Department of Finance at Tsinghua University, holds this view.　　Jianfang, chief macroeconomic analyst at Citic Securities, also said the CPI would become positive in the 4 quarter. There are three reasons for Zhu Jianfang: First, the impact of a rebound in commodity prices, followed by a year of big expansion in credit last year; again, the cycle of agricultural products will end in the 3 quarter.　　At the same time, PPI by the end of the year by negative change positive. The Bureau of Statistics also says it needs to be noted that food prices have risen for five consecutive months in January-May. Food isMany of the raw materials of food, but also with many agricultural products have a parity relationship.　　Therefore, whether the rise of grain prices will affect the future CPI trend remains to be further observed.　　Reporter noted that the price of grain prices for five consecutive months rose, residential prices with real estate warmer gradually upward, more professionals said that domestic product prices still have room for upward adjustment, these factors are likely to push the CPI in the second half of the gradual rebound. "If the CPI rebounds in the second half of the year, the CPI may be between 1% and 2%," said Jing Ulrich, managing director and China Regional Securities market.　　However, Gao Huiqing, the National Information Center, said the CPI would remain negative for the whole year, at a rate of about 0.5% to 0.8% per cent.　　"About PPI" data: year-on-year decline of 7.2% Quarter-on-quarter rose 0.1%. Optimism: The second half of the year will be the continuation of a positive economic recovery if the CPI drop of 1.4% is still expected, yesterday's sharp drop in PPI did surprise the market. Previously, the market forecast for May PPI was about 6.6% to 7%.　　Yesterday, experts said in an interview with reporters, the data is lower than expected, it may be with some industries before the blind increase in output caused by overcapacity. The view was also confirmed yesterday by the head of the National Bureau of Statistics. Despite a clear rebound in prices for some basic products over the past 2 months, it remains relatively low compared with last year's high, especially in the overall decline in industrial consumer prices.　　From the view of supply and demand, the situation of oversupply of industrial products in China is difficult to change in short term, which restrains the rapid pick-up of PPI in China. Although the May PPI decline as high as 7.2%, much higher than the April 6.6% decline, but from the monthly price changes in the chain, the chain Rose 0.1%.　　Among them, oil and natural gas mining, petroleum processing and coking, chemical fiber, non-ferrous metal smelting and calendering processing industry, the main products prices have been 3 consecutive months rose, showing a clear rebound trend. In Ms Ulrich's view, the PPI will turn positive in the second half. The rationale is that "demand for commodities is now in the process of recovery and the dollar is likely to weaken now, so it is likely to drive commodities up."　　"And then turn the PPI into positive. A macro-negative PPI situation will be eased in the growing consumption, said the CIC's macroeconomic analyst, MA-Yao.　　He expects the PPI index to regain strength and the trajectory of the recovery to continue after a short period of inventory.　　Whether the price trend will be from deflation to inflation because the upstream raw material prices are more obvious, at a time when domestic deflation expectations eased slightly, coupled with the spread of the May credit increase rebounded to 660 billion yuan news, so that the market began to worry about whether the future will usher in inflation again? "There will be inflationary expectations in the second half. "Zhongyuan Securities Macro-analyst He Weijiang in an interview that due to liquidity caused by upstream raw material prices rose more obvious, but the downstream demand did not rise, PPi still did not rise significantly.　　A recent report by the Center for National Confidence also shows that in the third quarter it is expected that the "wide currency", "Broad credit" double width combination, combined with "input" inflationary pressures, will accelerate the transition from deflation to inflationary trends.　　However, Frank Gong, the managing director of China in JPMorgan Chase and chief economist for Greater China, said in an interview that although inflation expectations are heating up, there is little likelihood that inflation will fall within the next three to 12-18 months. The reason for his judgment is that there is a huge surplus of capacity around the world. Frank Gong explained, "Global industrial start-up rate, equipment use rate is only about 60%, some industries in China are even lower."　　"In his view, the likelihood of real inflation is quite low under such huge capacity," he said. "The current anti-deflation is still the main means of stabilizing prices, the tone of moderately loose monetary policy should be maintained."　　Tang Jianwei, senior macro analyst at the Bank of Communications Research, said: there should be a response to the worries about future inflation, which should be fine-tuned in advance through monetary policy.　　Will macro-policy monetary policy turn to the expectation that CPI may fall to its lowest point this month, and the PPI will be positive in the next few months, plus "credit growth in May or over $600 billion," which has a positive effect on boosting confidence, and many in the industry are starting to speculate whether the future of macro-policy will turn? Ma, economist for the Greater China region of Deutsche Bank, said the government would not continue to loosen its policy.　　He said that policy development not only observes price movements, but also depends on credit, which is more important than any other indicator. "Given the forward-looking nature of monetary policy, the central bank may increase its focus in the second half." "Gao Shanwen said.　　But in his view, monetary policy should not be a big adjustment in the year, at most, fine-tuning, more likely to wait to change. In Gao Huiqing's view, the government's next major goal is still to strengthen the implementation of more difficult consumption policies. "In monetary policy, a large scale of lending may be relatively contractionary, instead of using other price measures to regulate appropriately."　　"Gao Huiqing said. Jia Kang, director of the Finance Science Institute of the Ministry of Finance, said in an interview that the next stage still has the uncertainty from the outside: "China's macro-control policy camera choice of the original framework should not be changed."　　The evolution of the main indicators for the two months following the two quarter is critical, and it needs to be closely tracked and prepared for ' good ' and ' bad ' two directions. National Information Center Report: Beware of inflation return rate, reserve requirement ratio is not major in the National Bureau of Statistics published the May CPI, PPI data the day before, the state Information Center economic Forecasting department also released their latest report. The report pointed out that the future of the world economy and China's economic stagnation is very likely, China's monetary policy needs to continue to maintain a "moderately loose" structural fine-tuning at the same time, to the potential risk of stagflation in advance to respond to prevent it.　　The report said that the current international commodity prices have been surging momentum, "input type" inflationary pressure increased.　　Second, a lot of money will not immediately cause inflation, but there is a lag, such as economic stability, the monetary multiplier effect will soon appear.　　According to estimates, M1 and M2 reflected in the CPI, may lag 8-9 months and 18-19 months, China's late April M2 growth of 25.95%, has been accelerated for the fifth consecutive month, M2 growth in the short term can be accepted, but if continue to climb, then the resurgence of high inflation is not alarmist.　　The report predicts that, starting in the third quarter, with a huge money supply stimulus, the "wide Currency", "Broad credit" double-width combination, combined with "input" inflationary pressures, will shift from a deflationary to an inflationary trend faster.　　The report argues that current interest rates and reserve requirements should not be adjusted sharply, and monetary policy needs to respond to potential stagflation at the same time as maintaining a moderately loose margin.　　The report pointed out that monetary policy should continue to maintain a moderately loose, the current economic stability of China's recovery is not a solid foundation, the economic trend of "U", "W" or "L" shape is possible, monetary policy if at this time the hasty tightening will face great risks. The report says monetary policy needs to pay more attention to potential inflationary pressures, and if the consumer price index rises by more than 3% and the economy appears to have stagflation, monetary policy should shift in time and shift from bias to relative neutrality.