Can China continue to stabilize prices in 2023?

(Economic Observer) Can China continue to stabilize prices in 2023?

　　China News Agency, Beijing, January 12 (Reporter Wang Enbo) Compared with the "high fever" of inflation in many economies around the world, China's annual price data for 2022 released on the 12th appears to be much milder.

　　In 2022, the monthly growth rate of China's consumer price index (CPI) will always run below 3%, and the annual growth rate will be 2%, which is significantly lower than the growth rate of developed economies such as the United States at around 8%, the euro zone at more than 8%, and the United Kingdom at around 9%. , It is also significantly lower than the 7%-10% (January-November) increase in emerging economies such as India, Brazil, and South Africa.

In the words of Wan Jinsong, director of the Price Department of China's National Development and Reform Commission, "the contrast between international inflation and domestic stability is very stark."

　　But stabilizing prices is not easy. China's efforts to ensure supply and stabilize prices are reflected in many aspects that are closely related to people's basic lives.

Important livelihood commodities related to "rice bags" and "vegetable baskets" are one of them.

　　In the past year, the National Development and Reform Commission has done a series of work on ensuring the supply and stable prices of important livelihood commodities such as grain, oil, meat, eggs, and vegetables, including strengthening the "vegetable basket" mayor responsibility system, and promoting the establishment and improvement of monitoring and early warning, anticipation guidance, regional cooperation, and reserve Plans for adjustment, production and sales connection, etc., guide localities to strengthen supply and price stability around the entire chain of production, supply, storage and sales.

　　In this context, for the whole of 2022, the food price index in China's CPI will rise by 2.8%, which is significantly lower than the 10% increase in major economies such as the United States and Europe.

The comparison of food price increases at home and abroad is more obvious. The monthly year-on-year increases of international wheat and corn prices are as high as 74% and 36%, while the trend of Chinese wheat and corn prices is relatively flat, and the retail prices of finished grains are more stable. The retail price of rice decreased by 1% compared with the previous year, and the retail price of flour increased by 3% compared with the previous year.

　　Energy prices have been one of the main drivers of high global inflation for some time.

In 2022, the international energy supply and demand situation is complex and severe, prices have risen sharply, and many countries have encountered energy crises; China is a major energy consumer and importer, and international shocks are combined with frequent extreme weather, and energy supply and price stability are facing greater risks and challenges.

　　To this end, on the basis of continuously strengthening the construction of the energy production, supply, storage and sales system, China has innovated mechanisms, stabilized expectations, and strengthened supervision. The three arrows have been launched together, and coal has been used as an anchor to maintain the overall stability of energy prices.

From January to November 2022, the energy prices in the CPI of the United States and the Eurozone will rise by about 27% and 38% year-on-year respectively, while the price of water, electricity and fuel for residents in China's CPI will only rise by about 3%, and the price increase of gasoline and diesel is also significantly lower than that of the United States and Europe.

　　After achieving stable operation in 2022, can China's prices continue to stabilize in 2023?

Officials are confident of that.

Wan Jinsong emphasized that although international bulk commodity prices may fluctuate at high levels and imported inflationary pressures still exist, there is a solid foundation for China's prices to remain stable.

　　Wen Bin, chief economist of China Minsheng Bank, predicts that China's CPI will continue to maintain a moderate level in 2023.

He mentioned that the overall supply of pork in China is guaranteed, and the price increase is expected to be limited; in addition, in recent years, China's grain harvests have continued to increase, and agricultural production has continued to remain stable. Except for fresh vegetables that are affected by the weather, it is difficult for overall food prices to fluctuate greatly.

At the same time, the global inflation center in 2023 is likely to be lower than that in 2022, and the imported inflation pressure facing China will drop significantly.

　　Wen Bin also mentioned that due to the reduction of external inflationary pressure and the repeated impact of the epidemic, China's CPI will drop significantly in the fourth quarter of 2022, which will reduce the carryover factors facing the CPI in 2023, and will also help maintain a low year-on-year growth rate for the whole year.

　　Pang Ming, chief economist and research director of Jones Lang LaSalle Greater China, also pointed out that driven by the demand side, China's inflation level is more likely to rise in the future, and the CPI growth center will rise compared with 2022, but inflation It does not constitute the main limiting factor of China's macro-control policies in 2023.

　　In Pang Ming's view, China's inflation situation throughout this year is moderate and controllable, and the probability of sustained rapid inflation is not high.

Against the background that the economy is gradually returning to a relatively normal supply-demand balance and a reasonable potential growth range, and monetary policy is still focused on consolidating the foundation of economic recovery and stabilizing upward momentum, there is no need to overemphasize the suppressive effect of inflation that has not exceeded the policy target on monetary policy.

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