Over the next decade, China will experience high inflation

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China to face high inflation in the next decade By Liu Huanyan, Economic Daily / Provided by United News Network (11.08.2010 10:27) China is set to enter an era of high inflation over the next decade. There is considerable debate among Chinese officials, scholars, and industry representatives regarding whether to set inflation targets, but the accelerating inflation clearly has a negative impact on the lives of ordinary people. Since October this year, the prices of foods and ingredients such as rice, flour, sugar, meat, eggs, milk, and cooking oil have risen rapidly one after another, forcing China’s Prime Minister ** to state at a regular government meeting that the focus of fiscal policies in the fourth quarter should be on controlling prices. A strange phenomenon has emerged recently in the Pearl River Delta. Due to the rapid rise in living costs in China, while the real purchasing power of the RMB tends to be higher than that of the Hong Kong dollar, many housewives from Guangzhou or Shenzhen travel south to shop, purchasing essential goods rather than luxury items such as LV. Zhu Baoliang, deputy director of the Economic Forecasting Department at the China **Information Center, said publicly on the 6th that inflationary pressures in China are increasing, with inflation rates expected to reach 4% next year. Wang Tao, head of China economic research at UBS Securities, predicts in a research report that over the next decade, prices for land, resources, and energy in China will need to rise to reflect their supply limits and relative scarcity. Furthermore, agricultural product prices must also be raised to reflect the rising opportunity costs of land and labor in non-agricultural industries, and these adjustments will show up as higher inflation. Wang Tao said, “Assuming gradual price reforms and **prudent management of monetary and credit policies, we forecast CPI to be between 3% and 5% in the medium term.” ” Many Chinese industry and academia experts believe that Chinese authorities should increase their tolerance for inflation. In a report, the Chinese Academy of Social Sciences suggested that considering raising the CPI control target to around 4%. Li Yining, a renowned Chinese economist, also suggested that the inflation rate should be raised to between 4% and 4.5%, but these proposals received no official response. According to the Economic Reference News, Zuo Xiaolei, a leading economist at China Galaxy Securities, believes that it is not that important whether China can keep inflation within 3% this year; to some extent, imported inflation is inevitable, and China’s economic resilience should be the factor taken into account when regulating prices. Zuo Xiaolei said, “As long as China’s economy maintains a growth rate of over 8%, it’s not a big deal even if the CPI exceeds 4% this year.” Of course, the side effects of excessive money issuance, especially the depreciation of the dollar, will gradually manifest themselves; **it is important to be aware of the problems that may arise as a result in the future. ” Source = Taiwan’s Economic Daily | For more interesting content, please visit United News Network. Chosun Ilbo’s Chinese website: chn.chosun.com