This round of rising prices of raw materials, energy and resources is the result of China's successful implementation of a proactive fiscal policy in response to the Southeast financial crisis and China's accession to the WTO. China's entry into the WTO is an important event in the history of China's economic development. From then on, China's economy must operate according to "international practice", no matter what your name is. International practices are formulated by countries or enterprises that can set world commodity prices, that is, on the premise of benefiting the interests of these countries and enterprises. In the early stage of industrialization, the acquisition of surplus value is low-level, such as extending working hours or increasing labor intensity or dumping goods. With the advent of the post-industrial era and the rapid development of international trade, the international transfer of wealth can be achieved through currency dumping under peaceful conditions. The financial crisis in Southeast Asia is not so much that an international speculator crossed several countries, but rather that international monopoly capital collectively stifled the economic development of nation-states through this new weapon.
Although China has survived the Southeast Asian financial crisis, it still faces a greater "game" between international monopoly capitals: after joining the WTO, China suddenly opened up a huge international market, and China used its labor price advantage to expand its exports and quickly accumulated huge foreign exchange reserves. Decades of insufficient foreign exchange reserves and the impact of the Southeast Asian crisis have caused China's national cultural psychology or national subconsciousness, which is manifested in the national will, that is, the centralized management system of foreign exchange. However, the current centralized preference for foreign exchange reserves is incompatible with historical time and space. Historically, monetary reserves existed in the form of gold and silver, but today's foreign currency has been divorced from the connection of "gold and silver", and its intrinsic value is entirely the result of the implementation of a country's "policy", which has caused the rapid outflow of national wealth in the process of continuous foreign exchange accumulation:
(1) Export-oriented economy is an important engine to promote sustainable economic development. In less than ten years in China, the external dependence of economic growth has rapidly increased from less than 30% to more than 70%. Therefore, China's economy cannot be separated from "opening to the outside world", that is, any fluctuation of the international economy, especially price fluctuation, will inevitably affect the domestic economy.
(2) The rapid accumulation of foreign exchange reserves after China's entry into WTO does play a great role in enhancing its ability to resist risks, but it also has a great reaction. Due to the great strength of the American economy, especially the US dollar in the world economy, the continuous depreciation of the US dollar has become the national will of the United States. Only when the dollar keeps depreciating can the United States solve the huge twin deficits problem accumulated by China, that is, transfer the world's wealth by selling dollars, and at the same time "cancel" the debt owed by the United States to the world. Therefore, the more countries reserve in dollars, the greater their "contribution" to the United States, with China bearing the brunt.
(3) Due to high savings and rapid accumulation of foreign exchange reserves, China has actually become an important capital exporter in the world. But up to now, China's capital export is mainly not in the form of foreign investment, but in the form of relatively low-priced commodity export and investment in US Treasury bonds. The depreciation of the US dollar made China's export commodities depreciate twice on the basis of low prices. When China invested heavily in dollar bonds again, 300 million migrant workers with real wages were "sending money" to the US Treasury.
While exporting in large quantities, China needs to import energy and raw materials. Fortunately, when China's exports increased greatly after China's entry into WTO, the international hype of "China concept" blew up. The prices of all macro commodities that China has no right to import (what China calls materials) have doubled, whether it is iron ore or oil. In this way, China's economy, which has been infected with export-oriented addiction, has formed a state of high-priced imported raw materials, relatively cheap exports (because it is at the low end of the smile curve) and the continuous loss of foreign exchange reserves caused by the depreciation of the US dollar. This is a worldwide value transfer process, which is based on the low labor cost of 300 million migrant workers, and the low labor cost corresponds to the low cost of labor organizations formed under the strict household registration system in China. Therefore, unless there is a sudden increase in agricultural production costs and a natural cycle of grain production reduction, the price increase of the upstream means of production will be digested in the process of the gradual decline of the profit rate of the downstream enterprises, and the increase of the wage level is a slow process because it cannot correspond to the improvement of the productivity of enterprises. The biggest advantage of this export-oriented economy based on the low wages of migrant workers is that demand-driven inflation is not easy to occur, that is, the continuous rise in the prices of upstream raw materials and means of production will not be completely transmitted to the prices of downstream consumer goods.
Therefore, as long as food prices are controlled, the overall level of inflation can be controlled. Through the reform of rural policy, especially the implementation of new rural construction, it is possible for some migrant workers to return to the countryside, thus gradually curbing the upward trend of food prices, especially in the past three quarters, the price of live pigs will gradually stabilize with the increase of the stock, and the higher level of new increase will definitely decline. Therefore, we can predict that after the summer of 2008, China's CPI will drop year-on-year, thus the tight monetary policy will slow down, which coincides with the opportunity for the new government to coordinate economic development under Scientific Outlook on Development.