1. Negative CPI growth in November triggered inflation scarcity againIn fact, it is difficult to stimulate the economic recovery by increasing the issuance of currency.
According to the data released over the weekend, China's CPI in November increased by 0 year-on-year5%, which is the second consecutive month in the negative growth range and the largest decline in recent years. In July, October and November this year, the CPI was **. 2% and 05%。The negative data for these three months has attracted a lot of attention and discussion. In traditional economics, moderate inflation is very beneficial to economic growth, but too high or too low inflation can have a negative impact on the economy.
However, as of the end of October this year, China's monetary aggregate increased by 22 trillion yuan, from 266 at the end of last year4 trillion yuan increased to 2882 trillion yuan. It stands to reason that such a huge increase in money issuance should stimulate inflation, but the fact is surprising is that prices are not as expected**. This has aroused people's vigilance and concern about the issuance of additional currency, and even the risk of deflation.
The over-issuance of money usually stimulates inflation, because the amount of money increases, people have more money in their hands, consumer demand increases, goods and services in the market are in short supply, and prices become the inevitable result. However, in the current situation, it is perplexing that the over-issuance of money has not caused inflation, and even negative price growth.
There may be many reasons for this phenomenon. First of all, due to the impact of the epidemic, market demand continues to be sluggish, and consumers' demand for goods and services is insufficient, resulting in the contradiction between supply and demand. Second, investment and exports have not rebounded significantly, and the pull on the economy is not enough. Third, despite the increase in monetary aggregates, the speed at which it is transmitted to the real economy is limited, and firms may be more inclined to make capital or financial investments than to expand production and increase employment.
Negative price growth means that people have more purchasing power for money in their hands, especially when prices are high, and more goods or services can be purchased for the same money. To a certain extent, this can improve the welfare level of consumers. However, the current negative price growth situation has not stimulated consumption as expected, and consumption still needs more stimulus.
On the one hand, consumers are cautious about the future economic outlook and are not fully confident in the increase in purchasing power. On the other hand, the impact of the epidemic on consumer Xi and behavior is also an important factor. Lockdowns and restrictions have led to weakness in some service sectors, and consumer demand for tourism, catering and other sectors has declined, further dampening the recovery in consumption.
Overall, negative price growth has had a series of impacts on the economy. It reflects both the current lack of demand and consumer concerns about the future direction of the economy. Therefore, it is not enough to rely on monetary policy stimulus, and more structural reforms and policy measures are needed to increase effective demand and boost consumer confidence.
Although the currency was overissued by 22 trillion yuan, this money did not enter the hands of the people for consumption, and it does not seem to have entered the economic level to cause prices**. This has raised concerns about the channels where money is delivered.
First of all, the lack of bank lending is an important reason. Despite the increase in currency issuance, the scale of bank loans has not expanded significantly, and some banks have been more cautious and prudent in conducting loan reviews, so that monetary liquidity has not been fully transmitted to the real economy. Secondly, the volatility of the financial market also affects the effect of monetary supply, especially the performance of ** and the property market have an important impact on people's asset expectations.
In addition, there are some structural problems. Although the amount of money has increased, the structural problems in the operation of the economy have not been effectively solved, and the profit growth of enterprises, investment and consumption are weak, which weakens the effect of additional currency issuance. Therefore, it is difficult to promote a virtuous cycle of the economy by relying solely on monetary policy, and it is necessary to further deepen reforms, optimize the industrial structure, and enhance the endogenous driving force of the economy.
At present, in the context of China's currency issuance, the negative price growth has aroused people's worries and doubts. From an economic point of view, both inflation and deflation have a negative impact on the economy, so monetary policy needs to be set carefully. Excessive issuance of additional money may trigger inflation, but being too conservative can lead to deflationary risks.
In the current situation, I believe that efforts should be made in the following aspects. First of all, it is necessary to further improve the financial system, increase the transmission effect of monetary policy, and increase the amount and amount of bank loans. Second, we should intensify structural reforms, improve the innovation ability and competitiveness of enterprises, increase the return on investment of assets, and stimulate consumer demand. In addition, it is necessary to persistently grasp the degree of monetary policy, avoid excessive easing and tightening, maintain a moderate inflation level, and maintain the smooth operation of the economy.
At the same time, it is also necessary to intensify macroeconomic regulation and control to achieve effective economic stimulation through fiscal policy. Increase public investment, promote infrastructure construction and industrial upgrading, and inject a steady stream of vitality into the economy. In addition, it is also necessary to strengthen the support and cultivation of the service industry, improve the competitiveness of the service industry, increase employment opportunities, and promote the growth of consumer demand.
To sum up, although the additional issuance of money did not trigger inflation, but showed negative price growth, we should not be blindly pessimistic and questionable about monetary policy. Monetary policy is only a means of economic regulation and control, and it needs to complement other economic policies to jointly promote the sound development of the economy. At the same time, we should also maintain a rational and objective attitude, pay attention to structural problems, promote economic restructuring, transformation and upgrading, and achieve sustainable economic development.