Taoist dirty: there is no inflationary pressure in China
There is no inflationary pressure in China
Recently some panic everywhere of the traditional face inflationary pressure. Depends
on the actual situation is indeed a cause for concern: Last year, nearly 10 trillion of
new loans, representing the GDPD 30%, money supply than the previous two years
combined. Most importantly, because China does not allow free convertibility of
foreign exchange capital account, so every increase of one U.S. dollar fore ign
exchange reserves, it must correspond to release 6.8 yuan, currently about 2.5 trillion
yuan issued by the corresponding foreign exchange reserves have accumulated to 17
trillion ( Yearbook 2007, Central Bank Foreign Exchange Reserves reached 12.84
trillion). In accordance with the laws of general macroeconomic, inflation should be
there. Moreover, in 2007 actually occurred in early 2008 price increases in prices.
So, China is not the existence of inflationary pressures, or inflation expectations the n?
Pindao that: not! Unchanged even in the case of existing operating system, will not be
Reason is that China has to some extent into a virtual economy, or economic status is
called gambling. Some non- mainstream scholars have long made Western economies
since the 80&#39;s into a kind of financial investment as the main content of the
state of economic activity:
Delinked from the dollar and gold, the dollar depreciated sharply, causing a large
number of export-oriented industrial countries such as Japan, Germany, sharp
fluctuations in the foreign exchange market. Such rapid fluctuations in exchange rates
so that companies can not do normal investment budget and business plan. In order to
iron out the exchange rate corresponds to the Western countries have issued a large
number of currencies in response to the dollar, then inflation in the late seventies to
the mid-eighties flooding in western countries. To curb inflation, countries began to
raise interest rates and the reserve is, but this has caused business costs, the struggling.
So from 70 to 80 mid-West into a so-called &quot;stagflation&quot; state.
Inflation is on the one hand, while economic stagnation. Typically, inflation means
that demand, faster economic growth. To explain this phenomenon, but also
achievements in a number of Nobel Prize winners (although they are not Pindao logic
By the late eighties, the West began to lower interest rates, especially in deposit rates.
Also started a massive &quot;financial innovation&quot; activities. Stock,
stock index futures, futures and other financial transactions created a large number of
products. In the case of deposit rates low, residents and some businesses will start a
lot of money into financial product transactions. Kaylee called &quot;white
slavery.&quot; Virtual economic activity to absorb liquidity, is unlimited. And
the characteristics of the virtual economy and real economy, quite the contrary. Not
afraid of capital into the stock market more, because more is nothing more than just
stock prices higher, the stock &quot;of inflation&quot; means the stock to
make money. So, the Dow Jones index from the mid-eighties to 2007, average annual
growth of 14%, higher than the GDP growth rate more than double. This also means
that a lot of money no longer do not impact the real economy, not to buy goods and
services, flow into the stock, futures, foreign exchange market was.
By the year 2005, the world 100 U.S. dollars per trading activity ,97-98 monogenetic
in the financial markets, that is, stocks, futures, foreign exchange trading volume is
the production, trade and service entities, several times the volume of economic
As a result, inflationary pressures out of the West from the consumer price index is
always within reasonable limits (2-4%). U.S. consumer price index in 1979-1980 was
more than 20%, from the mid 70s to mid 80s has hovered around 10%, but became
normal after 1990. Since the nineties following the U.S. price index (%):
2007 of 2.8
In other words, if the economy into a virtual economic stage, the main trading
activities of investment activities, then the high consumer prices would have to buy
the currency to the influx of the virtual economy, the so-called gambling. Consumer
price index to remain relatively stable but low growth.
Pindao think that China is entering the period.
Virtual Economy trick money with money, not just stocks, futures, foreign exchange
and other financial products, but also physical goods, such as increasing the amount
of restricted supply of oil, food, etc.. Of course, the limited supply of the house of
long period of products are also suitable for gambling.
In 2009, sales of 4.4 trillion commercial housing in China, most of which have
investment properties. Furthermore, most second- hand housing transactions volume
break new house, that China&#39;s real estate market in 2009, about 9 trillion
traded. This is almost equal to the total new loans that year. This year, the real estate
transaction volumes continue to rise, house prices continue to rise, a sharp increase in
second- hand housing transactions, which is a huge black hole of cash inflows, the
currency has strong absorptive capacity.
Meanwhile, the stock market is a huge black hole for capital. In 2007, the stock, bond
trading volume close to 50 trillion, twice the GDP that year. Market capitalization to
more than 90,000 million, means taking up 9 trillion of funds may impact the
consumer goods market.
Savings deposits of urban and rural residents from the growth of the association
which can be seen: Since 2005, housing prices, the housing market hot, while the
stock began to rise. Highest point is the middle of 2007, the stock crossed the
6,000-point, house prices are highest in this cycle rushed. Second half of 2007 stock
market crash, housing prices and housing market are shrinking. 2008, the stock
market and housing market are to a minimum. 2009 housing and stock market started
to climb again. Correspondence is that a growth rate of China&#39;s urban and
rural household savings (%):
Data show that all the housing market, the stock market rise, urban and rural
household savings rate will reduce, any housing market downturn, growth in urban
and rural residents will increase savings. Meanwhile, the prosperity of all housing
stock, the consumer price index growth is not fast, all stock and real estate market
downturn, consumer price index growth was faster. The following is the consumer
price index over the same period:
Therefore, the virtual economy and real economy, the price price is the opposite
movement. To another on a high to low. The reason is simple, funds do not go there
here. Either raise or raise that this.
Pindao that China will be a very thriving property market and the stock market,
because the housing market is in China&#39;s economic growth is the only
power source. The housing market is not growing, there is no front-end real estate
industry chain and back-end of some listed a number of industries as industrial growth.
Real estate accounts for a net increase in 2009 net increase in the amount of 90%. The
Chinese Government always maintain economic growth, booming real estate always,
always raise prices, an influx of funds in the market, more and more, so inflationary
pressures are getting smaller and smaller! In addition to the opposite situation.
Pindao check inflation will not occur for another reason, personal income, particularly
low- income strata of slow income growth, income levels are too low, weak
purchasing power of the consumer goods caused. Can even be said that this is more
important does not support the cause of inflation will occur.
Incremental and Incremental Currency physical differences occur, such as the former
grow faster, which grow slowly, will cause price fluctuations. Excessive currency and
in kind, per unit of physical corresponding to more money, and prices on the rise. But
things are not so simple. Consumer goods for personal consumption on the marginal
decline, if the new release a few people making money are gone, most people new
currency growth below revenue growth, even lower than the physical growth, then
inflation may not occur. Because few people will not be earning more money and eat
several kilograms of meat. The majority of people did not increase the money in the
hands, so still not form needs. 2009 Currency increased by nearly 10 trillion, but the
consumer price index fell 0.7%, case in point. Meanwhile, the new century, the
proportion of Chinese workers return from the turn of the century more than 50%
down to about 37% now, the price index is still hovering in the main position.
As long as most people do not release the money from the excess number of isolated,
most of the new issue of currency by a few people away, then the money will continue
to raise prices, raise the stock market, but will not form on the consumer goods
Therefore, China can expect is this: stock prices also president of the inflationary
pressure is completely false. Pindao the situation was
&quot;optimistic&quot; about it.