The last time the CPI was negative was only a month, but this time the CPI has been negative for two consecutive months, are we really going to fall into a deflationary trap?
What should we do in 2024 in case of deflation?
Since March this year, there have been many voices saying that China's economy is deflationary. However, some economic experts said that by analyzing some data, it is conclusively shown that China's economy may be experiencing "quasi-deflation", which is not really deflationary.
So, is it quasi-deflationary or deflationary?
Let's take a look at the CPI data. The year-on-year growth rate of CPI in November was only -05%, well below the market expectation of -01%。This data shows that the consumer index is falling more than the market expects.
At the same time, we also noticed that domestic prices appeared**, such as pork**, which continued to fall by as much as 31 during the month8%。
In addition to food, the trend of non-food is also not optimistic. The increase in international oil prices has led to the suppression of the growth of domestic oil prices, coal and natural gas, which in turn has affected the delivery of products.
Let's look at the PPI data. The year-on-year growth rate of PPI in November was -30%, which is also lower than the market expectation of -28%。This data suggests that the producer index is also in, and it has fallen more than the market expects.
In fact, the deflation of CPI and PPI is only the tip of the iceberg of the many problems facing China's economy.
The deep-seated reason is that the endogenous momentum of the economy is insufficient, the demand continues to shrink, and at the same time is affected by the global economic recession, which has led to short-term fluctuations in China's economy in the recovery process.
We have no way to meet the needs of foreign countries, and the way we can think of now is to do our own thing, especially to stimulate domestic demand.
So in 2024, the following aspects are very important.
First, monetary policy will continue to remain prudent and strengthen cross-cyclical adjustment and counter-cyclical adjustment of macro policies. The central bank will continue to be prudent in regulating market liquidity.
The current inflationary environment allows us to cut the RRR or interest rates again.
Second, fiscal policy will be the focus in 2024. We have not made full use of fiscal policy to boost economic development, and the issuance of an additional $1 trillion in special government bonds in October is just the beginning.
It is expected that the fiscal policy stimulus will be further strengthened next year, and funds will be directly injected into the real economy through the issuance of state bonds, forming a virtuous circle, so as to efficiently create demand, promote employment, and promote the growth of GDP and corporate profits.
In particular, stimulating domestic demand and stimulating consumption is the top priority.
So far, this year's total social consumption is in the highest state, indicating that consumption is slowly recovering.
Recent central bank data also suggests that household deposits are starting to decline, which is also a good option.
Since it is necessary to stimulate consumption, it is inseparable from promoting employment, and only when the people have jobs, after their incomes are stable, they will naturally be willing to consume, so as to promote the growth of domestic demand.
Therefore, efforts are still needed to stabilize employment next year.
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