Inflation is an important issue that affects a country's economic growth and operation. In China, the overall price level is basically measured by the retail price index. Since the reform and opening up, there have been four major inflation events: 1985, 1988, 1993, and 1994, and the peak value of each increase is constantly rising. A wave of price increases in the early 1990s peaked at over 20%. From 1994 to 2002, China experienced another period of deflation. From August 2003 to the beginning of 2008, China gradually entered a relatively moderate inflation period, and it remains to be seen whether it will turn from moderate to serious. This paper discusses the causes of current inflation in China from the international and domestic levels.
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In our economics textbook, there is such a definition of inflation, which generally refers to the phenomenon of devaluation and price increase of paper money caused by the fact that the circulation of paper money exceeds the actual amount of money needed in commodity circulation. At the same time, it can also be defined as that the total supply is less than the total demand, prices continue to rise for more than 6 months, or the currency continues to depreciate for more than 6 months, and the price increase rate is greater than or equal to 3%. Carefully divided, the price growth rate between 3% and 5% is moderate inflation, between 5% and 10% is serious inflation, and the price growth rate greater than 10% is pentium inflation (that is, serious inflation).
Inflation is generally measured by price index. At present, China's price index mainly includes commodity retail price index, consumer price index, fixed asset price index, agricultural product purchase price index, industrial product ex-factory price index and construction industry output value price index.
According to the data published in the 2007 National Economic Statistics Bulletin:
According to preliminary accounting, the annual GDP was 24661900 million yuan, an increase of 1 1.4% over the previous year. By industry, the added value of the primary industry was 289 1 100 million yuan, an increase of 3.7%; The added value of the secondary industry 12 138 1 100 million yuan, an increase of13.4%; The added value of the tertiary industry was 9,632.8 billion yuan, an increase of 1 1.4%. The added value of the primary industry accounted for 1 1.7% of the GDP, which was the same as that of the previous year. The added value of the secondary industry accounted for 49.2%, up by 0.3 percentage points; The proportion of the added value of the tertiary industry was 39. 1%, down by 0.3 percentage points. On a quarterly basis, it increased by11%in the first quarter, 1 1.9% in the second quarter, 1 1.5% in the third quarter and/kloc in the fourth quarter.
At the end of the year, China's foreign exchange reserves stood at $654.38+052.82 billion, an increase of $466.543+09 billion over the end of last year. At the end of the year, the RMB exchange rate was 1 USD = 7.3046 RMB, an appreciation of 6.9% over the end of last year.
According to the official data released by the above-mentioned countries, the consumer price index reached 4.8% in 2007, and even reached 5.6% in some months (such as July and August), exceeding the original target of controlling inflation by 3%. It should be said that it is a red light for the macro-control authorities, and it can be said that only moderate inflation has been achieved.
Under the condition of market economy, price is the most basic signal. If prices generally continue to rise (inflation), the change of specific commodity prices will lose its signal function, and the market will lose its function of rational allocation of resources. For example, in a non-inflationary environment, pork prices have risen, and it is easy for you to judge that pork is in short supply. Under the guidance of the pork price signal, the investment in raising pigs will increase, and the supply of pork will also increase. In the environment of serious inflation, no one knows to what extent the price increase of pork reflects the change of supply and demand and the general price increase, so serious inflation will invalidate the price signal and make the economic order chaotic.
International experience proves that the increase of inflation rate will lead to the increase of Gini coefficient (1). The biggest victims of rising CPI are low-and middle-income workers. For example, the rising price of pork and food is a great blow to the low-income class who live on low wages and social security. In addition, low-and middle-income workers can't preserve their savings by buying real estate, and they don't have enough funds to buy financial assets that can preserve their value, such as stocks. Inflation and the rise of CPI will further widen the income gap and wealth gap of different social classes, leading to a large gap between the rich and the poor, which is an important factor of social instability.
Through the analysis of the above data, combined with the current domestic overall market situation and the surrounding prices in people's lives, I think it is indeed in an inflation period, but it is far from serious inflation, and it is only a moderate inflation period at best. As economist Fan Gang said, China's inflation rate will certainly increase, but it will not necessarily lead to high inflation. At present, we are worried that high-speed growth will lead to a large amount of overcapacity in the future, which will lead to a new round of deflation. Now we need to prevent the ups and downs of China's economy.
So what causes the current overheating of China's economy, which leads to rising prices and moderate inflation? Analyze the reasons, mainly divided into international and domestic influences.
From the perspective of international factors, it is divided into two parts: one is the rise of international oil and raw material prices; Due to the sharp rise in the prices of raw materials and crude oil in China, especially crude oil, from 10.3 USD, the lowest at the end of 1998, to about 90 USD at present, with an increase of 8 times, reaching a record high. The rise of crude oil price directly leads to the rise of crude oil products, including automobile gasoline, diesel oil and petrochemical products, such as fertilizers and plastics. (Obviously, the increase of chemical fertilizer will inevitably lead to the increase of agricultural product prices; The rise of oil price will directly lead to the rise of electricity price and freight, which will inevitably lead to the further rise of prices.
Second, many people say that the appreciation of RMB against the US dollar should effectively control inflation, but now there is still inflation in China. What is the reason?
I think it's because the dollar is depreciating sharply against the two cornerstones of the two currencies: gold and oil, so we can't just look at the problem from the ratio of the dollar. In 2007, although the RMB rose from 7.8 to 7.3, 7% higher than the US dollar, at the same time, the price of crude oil rose from 58 US dollars to 90 US dollars, an increase of 70%. The price of gold rose from $620/ounce to $850/ounce, an increase of more than 35%. At the same time, the RMB depreciated by 63% relative to oil and by more than 30% relative to gold. Compared with other industrial raw materials, such as iron ore, copper (rising in 2004-06), aluminum, etc., there are different degrees of depreciation. In addition, compared with the euro except the US dollar, the RMB has also depreciated by nearly 10%. Therefore, according to the growth rate, China's GDP in 2007 should have surpassed that of Germany, but in fact, because the euro rose from 1.29 to 1.49 against the US dollar, rising by more than 17% and appreciating by 10% against the RMB, China's GDP in 2007 was still slightly lower than that of Germany. The RMB depreciates inside and outside, and only appreciates against the US dollar. Therefore, we can see at a glance why the appreciation of RMB does not control domestic inflation well.
From the perspective of domestic factors, we will find that * * * has pushed up prices, leading to the current inflation in China, that is, real estate (including land), raw materials (including oil, etc. , related to national prices) and the stock market. Real estate and stock market have caused an oversupply of money. The liquidity of money in the market is 3%, while the raw materials are the scarcity of products themselves and the rise in prices. Three factors interact with each other, a vicious circle, and rising prices.
How do they interact? Let's start with a simple model example.
For real estate, its impact on a country's economy is multifaceted and multi-angled. Suppose a person spent 300,000 yuan to buy a house and borrowed 700,000 yuan, then the developer got 6,543,800 yuan for distribution. It's simple. Through the operation of bank loans, social funds suddenly changed from 300,000 to 6,543.8+0,000, but the question is, is this house really worth 6,543.8+0,000? Obviously, this house should sell for 500 thousand, which is its price, or the value of creating this house on behalf of society. Obviously, the house price has been overvalued, far exceeding its cost. As a result, of the 700,000 loans issued by banks, 500,000 were overspent, that is, 500,000 were not circulated, but circulated.
This is happening all over the country, and the price increase can be said to be inevitable. Moreover, this price increase, if the factor of rising international raw materials is deducted, should be a short process, which will end in a few years, but obviously, we are currently in the process.
Why is it asserted that inflation will end in a few years? In the above example, 300,000 people bought a house with a price of 6,543,800+0,000 yuan and borrowed 700,000 yuan from the bank. This 700,000 yuan was spent by others, resulting in excess funds in the market. This is temporary, because this person who borrowed 700,000 yuan will always reduce consumption in order to repay the loan in the future. Simply put, the developer who gets 700,000 yuan from the bank will be in a period of time. There will be excess liquidity in the short term, which will lead to inflation. In the long run, buyers will pay for this 700 thousand. In the long run, there will be a balance between consumption and austerity. This balance will come sooner or later, and the economy will bear the price because of the excessive overdraft of future wealth.
Let's take a look at the current subprime mortgage crisis in the United States. Obviously, this is achieved by borrowing a lot from banks in recent years. This kind of debt, whether private or government, has caused excessive circulation of dollars. But the digestion of the dollar is worldwide. The world can no longer digest so many dollars printed by the printing press, and the purchasing power of dollars has declined, while Americans have tightened consumption in order to repay loans, resulting in worldwide inflation.
Secondly, it is the composition of housing prices. China produces one third of the world's cement and one quarter of the world's steel. Both of them are related to real estate and belong to cost. It can be said that there are three factors that constitute housing prices, housing prices = land costs+construction costs+profits, but in fact it is very complicated to operate.
The first factor that affects housing prices, high land price, is the primary factor that causes high housing prices, and this land price can be determined by the market and is selective. However, the reason for the high land price in China is that the sale of land in China is monopolized by local governments.
To put it simply, because land sales in China are monopolized by local governments, there is no competition mechanism for prices, so basically the prices are on the scale controlled by local governments. In the previous stage, I saw on the news that a government building in Liuyang, Hunan Province, with a population of only 6.5438+0.3 million, was more magnificent than the White House. There were about four or five plots of land around it, but they were all sold piece by piece, and the selling price was still rising. The government was in no hurry. Although the prices are publicly invited by the government to the developers, the developers have no other choice, because this is the only piece of land that is sold at one time, and the whole land price is completely monopolized and manipulated by the government.
This is true of almost any small and medium-sized city in China. This land has doubled the threshold of house prices. The revenue from land auction has accounted for more than 60% of the fiscal revenue of many local governments, and then local governments will use the money to build new government buildings, public security bureau buildings and tax buildings, instead of helping the poor, supporting education and improving medical care, which are more magnificent than the White House in the United States. Let international friends meet, and they will think that China is already a developed country.
Remove the land, developers generally get the land and immediately apply for huge loans at local banks. This huge loan is a cycle created out of thin air, which leads to a large flow of funds.
Real estate developers spend a lot of money on land acquisition, which can be said to greatly increase the cost. And real estate developers have to pass on all these costs to buyers, resulting in high housing prices.
Finally, in recent years, the market value of China stock market has increased by 1.5 times, from the end of 2005 to 10 month in 2007, increasing by more than 6 times. This myth of making wealth in the stock market seems to be staged every day. The number of investors in China has reached the second place in the world, with 1 100 million investors. It seems that everyone is enjoying the fruits of China's economic development, and everyone is striving to contribute to China's economy.
How does the stock market cause inflation? The premise that the stock market leads to inflation is a period of unilateral market, just like the stock market from the end of 2005 to 2007 10. Although it has experienced several sharp falls, it has spiraled up as a whole.
During this period, the original 1 yuan shares rose to 6 yuan, and the original 10 yuan rose to 60 yuan, an increase of 6 times. However, we don't know where the other five times of money came from, but we know that in the second half of 2007, the overall market value of China's stock market rose from about 3 trillion to more than 20 trillion, and the accumulated wealth in a short time exceeded 15 trillion. What a huge number this is. Some people will wonder why there is such a huge accumulation of wealth in the stock market, because it can happen in a unilateral market of the stock market (everyone makes money). Making money here means that the money in hand has increased, but it does not necessarily mean that the things it can buy have increased (because of inflation).
Because China's stock market unilaterally "created" more than 15 trillion of wealth, China has experienced inflation, and it will be inflation for some time to come, which will pay for the overheated stock market and housing market in the past two years.
China's CPI in 2007 was 5.6%, and it was only 4.8% for the whole year, including the doubling of pork prices and the doubling or even fivefold increase of vegetable prices, but excluding the 50% increase of house prices. 50% is no exaggeration. Take Shanghai as an example. In most places, house prices rose by more than 40%, and in many places the rate even exceeded 100%.
It is precisely because China's CPI calculation doesn't take house prices into account like foreign countries, so the China government, including local governments, lacks vigilance against rising prices. In my opinion, China's CPI data of 4.8% in 2007 is worthless. The rise in housing prices in China, which started three years ago, is one of the chief culprits of the overall price increase, but the CPI data does not include housing prices, which hides the crisis. It didn't explode until now. If housing prices are included, the CPI of China in 2007 should be around 20%, or even higher, instead of 4.7%. Therefore, although the current inflation is moderate, our government and people should pay enough attention to it, otherwise it will be very dangerous to really reach a period of serious inflation.
Conclusion: According to the international and domestic causes of inflation in China and the official data of China, China is currently in a period of moderate inflation, but in fact, we are on the verge of serious inflation. If the government does not pay enough attention to it and introduce policies, our consequences will be very serious. This is not an alarmist.
Note: 1 Quantitatively measure the difference of income distribution, inspect the domestic income distribution, and reflect the data boundary of the difference between the rich and the poor. Located between 0- 1, 0.4 is the warning line.
There has been another gold craze recently. As inflation intensifies, people distrust stocks and bonds, so they reduce their holdings and seize gold instead, so the gold boom rises.
Liquidity is the difficulty of a commodity trading with other commodities. Excess refers to the excessive amount of money, and these excess funds will inevitably find a way out of investment because of the profit-seeking nature of capital, which will lead to overheated investment and implied inflation.
Consumer prices rose by 4.8% over the previous year, with food prices rising by 12.3%. The retail price of commodities rose by 3.8%. The investment price of fixed assets rose by 3.9%. The ex-factory price of industrial products rose by 3. 1%, of which the price of means of production rose by 3.2% and the price of means of subsistence rose by 2.8%. The purchase prices of raw materials, fuel and power increased by 4.4%. The production price of agricultural products rose 18.5%. The sales prices of houses in 70 large and medium-sized cities rose by 7.6%, of which the prices of newly-built commercial houses rose by 8.2% and the prices of second-hand houses rose by 7.4%. The rental price of houses rose by 2.6%.