In 2022, the world will enter a state of extreme madness.
In February, the conflict between Russia and Ukraine broke out, and the epidemic began to spread in its third wave
Energy began to rise, the situation began to deteriorate, disputes and battles between countries were frequent.
Many countries are on the brink of crisis, and the world faces the threat of severe inflation.
Prices have skyrocketed in many countries and the cost of living has risen dramatically.
Inflation in 19 European countries was 8.6 per cent, the highest since records began in 1997, with inflation above 10 per cent in nine of them.
U.S. inflation hit a 50-year high, with CPI inflation most recently at 9.1%, the biggest increase since 1970.
Inflation is worse in the UK. In May, the consumer price index rose 9.1 percent, its highest level since March 1982.
Turkey's inflation rises to 73.5% in May
The International Monetary Fund forecasts that global average inflation will reach 7.4% in 2022, the highest level since 1997.
But strangely, at a time when global inflation is accelerating, China is quite different.
In March, consumer prices in China rose only 1.5% year-on-year.
In May, consumer prices in China rose 2.1% year-on-year.
So the question is, why is the world inflationary, but China is unharmed?
delivery
At the heart of inflation is supply.
Let's say there is 100 yuan on the market, which is equivalent to 100 eggs. Now there is too much money printed, it has become 500 yuan, so the price of 1 egg has risen from 1 yuan to 5 yuan
This is inflation.
In recent decades, the world's major economies have continuously released water to stimulate the economy, and too much money has been printed on the market!
Especially at the beginning of 2020, countries around the world have started crazy money printing mode.
Compared with other countries, when the epidemic in China was at its worst in 2020, the central bank did not issue a large surplus currency to rescue the market. Only minor rate cuts and targeted credit bailouts
As a result, China is also moderate compared to other countries, but it is very restrained.
Control of resources in state-owned enterprises
The root causes of inflation in many countries are energy shortages and supply chain disruptions.
Affected by the crises in Russia and Ukraine, oil and gas prices in the world market are changing with each passing day and are constantly rising.
There are shortages of natural gas and oil in many countries in the world, which seriously affect the normal production and living arrangements in China. Driven by the rise in raw material and energy prices, all links of the entire industrial chain are naturally affected
The result is inflation throughout society and a general rise in prices.
China, on the other hand, implements a strict control and monopoly system on commodities such as energy and people's livelihood.
In fact, China is not non-inflationary, but structural.
In fact, China's PPI producer price index has been at a low level for a long time, but it has fallen in the consumer price index.
Why is the domestic PPI not transmitted to the consumer price index?
China has a magical department called the National Development and Reform Commission. The task of the Development and Reform Commission is to regulate prices.
The price of many products cannot be arbitrarily increased and must be strictly approved. Without such a magical department as the National Development and Reform Commission, many daily needs would not have been able to rise at all!
For example, there have been food shortages in many countries recently, but China's food prices have remained stable.
1. The world's self-sufficiency rate of basic food exceeds 93%, and domestic food prices are self-sufficient. The state sets the food price system according to domestic demand, so China's grain price has long been negatively correlated with international food prices
2 China's long-term grain reserves – The USDA estimates that by mid-2022, China will have 69% of global corn reserves, 60% of rice reserves, and 51% of wheat reserves.
3. The National Development and Reform Commission monitors food prices and does not allow speculation to rise.
The same applies to energy.
China's commodities are not highly market-oriented and largely subject to regulation.
For example, the price of thermal coal has skyrocketed, the National Development and Reform Commission has forced it down, not allowing thermal coal prices to rise, and state-owned enterprises have increased production to supply power plants. This feature cannot be replicated in other countries
This ensures that the price of people's livelihood energy in the terminal will not rise too much.
In terms of oil prices, China has been stockpiling large amounts of crude oil products and has recently bought large quantities of Russian oil and gas. As a result, gasoline prices in China have risen accordingly, but not suddenly at a particularly outrageous rate.
deplete
China's GDP has become the second largest in the world, but labor costs remain very low, which is rare in the world.
Other countries have to raise wages if they have money. As soon as wages rise, wages in all human-related fields will skyrocket. When residents have more money, inflation accelerates.
Wages have slowed inflation.
Now that the pandemic is on the rise, economic liquidity has fallen dramatically. For example, non-essential spending such as air travel, travel, and food and beverage has fallen sharply. These industries correspond to disruptions. The population and income working in these sectors have declined significantly. If it is greater than demand, it is difficult for prices to rise effectively.
In addition to daily needs, everyone began to live frugally, and the endless money could not be spent, and the desire to consume was also reduced.
Demand weakens and inflation is naturally contained.
weight
Of the weight of China's inflation, pork medicine accounts for a large part of the weight.
1 Now there is a slight surplus of pork, which slows the growth of overall food prices and masks the rise in vegetable prices.
2 Medical reform depresses prices, and medical care is the second weight of CPI.
3 Service CPI can be considered as the price of labor. Underconsumption and high unemployment have led to low labour prices and lower overall consumer prices. 4 Other chips, semiconductors, high-precision instruments and equipment account for a relatively small share in the consumer price index. Although it increases, it does not increase the total cost.
manufacturing
China's full-format production chain is long and comprehensive, enough to absorb the rise in raw material prices. It is the only supply chain in the world that has withstood the test of the epidemic and is still operating in the whole industrial chain.
For example, due to the rise in oil and gas prices, the price of product A also increased, but the price of product B decreased due to resource dividends or NDRC price restrictions. When multiple products are combined together, the final price tends to balance.
At last
All in all, we are not affected by rampant inflation abroad because it is only temporary.
What should come, will come.
Anything can happen next month.
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