Control inflation expectation
Updated: 2013-01-29 22:28
(chinadaily.com.cn)
|
|||||||||||
Inflation is a worrisome problem for the Chinese economy in 2013 according to the Davos World Economy Forum held in Switzerland. Controlling expectations of inflation is more important than controlling inflation itself, says an article of the 21st Century Business Herald. Excerpts:
China's inflationary pressure has rebounded for two months. If China maintains its economic growth, it has to accommodate an expected inflation rate of 3 percent to 3.5 percent.
But the expectation of inflation is running high as most local governments decide to boost economic growth through large-scale investment. And the popular concept of urbanization gives local governments a reliable excuse to increase their investments.
The rebound of housing prices in many cities late last year signals that a new round of inflation is expected on the horizon.
Although expectations of inflation are different from inflation, the expectation, if not controlled, will aggravate some social problems. The exorbitant housing price is just one case in point.
Transforming the economic growth model and upgrading the real economy's internal structure are the most important jobs to relieve inflation pressure, despite a possible dip in economic growth. One example is that the investment for the manufacturing industry continues to decline in the fourth quarter of 2012 and the growth of private capital investment in fixed assets is slowing. So the government should inject more funds into the backbone manufacturing industry and actively lead private capital to invest in the real economy.
Meanwhile, the government should not release its control of housing prices. Otherwise, the government is sending a clear signal it is rescuing the Chinese economy by raising housing and land prices. The government should continue its strict control of housing prices and keep the stability of its currency policies and adjust social financing structure and credit scales according to the real needs of economic structure transformation.
In fact, the reform of social welfare systems is the best way for China to dilute its inflationary pressure and expectations. Investment in building a social security net nationwide will not cause inflation but yield positive social effects.
Related Stories
Inflation rise 'on the horizon' 2013-01-21 07:22
Inflation risks 2013-01-14 07:55
Inflation uptick to complicate economic outlook 2013-01-12 15:15
Chinese shares retreat on inflation data - Jan 11 2013-01-11 17:42
China's Dec inflation rises 2.5% 2013-01-11 10:14
Today's Top News
Police continue manhunt for 2nd bombing suspect
H7N9 flu transmission studied
8% growth predicted for Q2
Nuke reactor gets foreign contract
First couple on Time's list of most influential
'Green' awareness levels drop in Beijing
Palace Museum spruces up
Trading channels 'need to broaden'
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Liaoning: China's oceangoing giant |
Poultry industry under pressure |
'Spring' in the air for NGOs? |
Boy set to drive Chinese golf |
Latest technology gets people talking |
Firms crave cyber connection |