The Macroeconomic monthly data analysis report recently released by the National Institute of Development and Strategy of Renmin University of China shows that, At the beginning of 2017, China’s economy showed a new feature: prices completed a “U-shaped” recovery. Whether it is CPI, PPI, Import and export Both prices and the comprehensive GDP deflator show a perfect “U-shaped” trend.
Prices have completed a “U-shaped” recovery at the beginning of 2017: First, from the perspective of consumption, CPI has shown an obvious “U-shaped” recovery, and the possibility of the Spring Festival factor being dominant can basically be ruled out. Secondly, from the perspective of production, PPI has completed a “U-shaped” recovery trend that is more obvious. Thirdly, from the perspective of import and export trade, the import and export price index also shows a “U-shaped” trend. Finally, on the whole, the GDP deflator shows a strong “U-shaped” recovery trend.
Thereportpointedoutthatthecurrent”U-shaped”pricerecoveryreflectsimportantchangesineconomicfundamentals.China’seconomyhascontinuedtoheatupsincethebeginningof2017.ThecurrentriseinpricesfirstreflectstherecoveryofChina’seconomy,includingthestabilizationandrecoveryofthemanufacturingindustry.ThepricerecoveryalsoreflectstherecoveryofChina’sforeigntrade,especiallytherapidrecoveryofimportdemand.Thepricerecoveryreflectstherelativechangesinthemarketsupplyanddemandstructure.
Thereportbelievesthatthebiggestimpactofthe”U-shaped”pricereboundontheChineseeconomyistogetridofthepressureof”deflation” on the Chinese economy. First, rising prices have reduced “debt-deflation” pressures. Secondly, price recovery will lead to improved corporate performance. Thirdly, the price recovery will lead to an increase in corporate investment. Thirdly, a rebound in CPI prices may mean a relative increase in residents’ living costs. Finally, rising prices free up room for monetary policy to prevent asset bubbles and respond to exchange rate depreciation.
The report also provides an outlook on China’s economic situation in 2017. China’s economic situation is expected to be stable and improving in 2017, with GDP growth expected to reach 6.5%-7% and CPI growth 2.5%-3%.
(Original title: Renmin University Report: China’s economy continues to heat up at the beginning of 2017)
