Chinese experts recently have expressed optimism over the
country's macro-economic growth, saying it is within the normal
range and China is unlikely to encounter hyperinflation in next two
or three years.
Zhang Hanya, former director of the investment department under
the State Development and Reform Commission (SDRC), said China is
experiencing an economic boom with rapid growth and low
inflation.
Official statistics show the consumer price index (CPI), the
government's most closely watched inflation barometer, increased in
the first nine months this year by 0.7 percent over the same period
last year, and the growth is expected to reach 0.9 percent by the
end of this year.
According to the statistics, though grain prices began to rise
in August, retail prices dropped. The prices of industrial
products, up by 2.4 percent in the third quarter, recovered from
earlier drops.
Steel products fluctuated between 2,800 to 3,000 yuan per ton in
recent months, unlike the straight-line rise from 1,700 to 4,100
yuan per ton between April 1992 and April 1993. Experts said the
fluctuation occurred when more steel products flooded the market,
which curbed the price hike.
With sufficient grain stocks, the government is also capable of
controlling grain prices, Zhang Hanya said.
He predicted next year's CPI will remain between 2 to 3 percent,
which indicates hyperinflation is still unlikely.
He considered there will be no economic strain if the inflation
rate is kept under 10 percent. "Inflation is only an economic
signal and won't threaten society if farmers and workers don't stop
work to supply enough products."
"Moderate inflation, in contrast, will encourage the activity of
producers and enable them to make more profit," he said.
Li Deshui, director of the National Bureau of
Statistics (NBS), said China's current economic expansion is
quite different from a decade ago, as market forces have been
greatly enhanced in regulating resources allocation.
China increased monetary supply since July, and prices for basic
consumption goods also rose due to the influence of soaring grain
prices, which are two possible factors leading to inflation, Li
said.
"But China's many processing industries, like steel, cement,
textiles and machinery, have improved production capacities, which
will intensify competition and pull down prices. With China's
gradual fulfillment of commitments to the World Trade Organization,
more cheap foreign products, including automobiles, refined oil and
electronic products will flood in, which will also result in a
general slump in prices," Li said.
Chinese economist Lin Yifu considered China does not need to
worry about hyper-inflation, but should watch out for deflation
caused by overheating investments.
(Xinhua News Agency November 23, 2003)