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The "deflationary crisis" of the Chinese economy has been in the spotlight, and we have raised this issue earlier. However, the latest data show that although China does not have strict deflation, there is "pseudo-deflation" that deserves our vigilance.
The CPI data for April showed that the CPI of seven provinces and cities, including Shanghai, entered a negative range, that is, prices did not rise overall, but declined. Nationally, the CPI rose by only 0.1% in April, falling by 0.6%, hitting a two-year low.
At the same time, the PPI continued to fall and signs of deflation were emerging. Credit has also seen negative growth, and the amount of medium-term and short-term loans has decreased by about 110 billion yuan, indicating that the people's consumer confidence is not strong, the willingness to buy houses has not picked up, and the real estate market is still facing severe problems.
This series of data shows that although there is no actual deflation in China, the economy has experienced a similar deflationary situation. Some people may question, knowing that the CPI data is so obvious, is China not deflationary? However, simply applying the standards of Western economics to draw conclusions may not be accurate, and we need to look at deflation in light of China's national conditions.
First of all, the main problem of China's economy is that after the epidemic prevention turned to dividends, the economic repair process in many places has tended to be completed. After the end of economic restorative growth, the essential problem of China's economy was exposed, that is, "endogenous power is not strong", which is manifested in domestic demand is still insufficient.
As the world's factory, China has very strong production capacity, but these capacities need orders to survive. The decline in CPI means that there is insufficient demand, resulting in fewer orders and unable to support China's huge production capacity. This will lead to a series of problems such as idle capacity, factory shutdowns, business closures, layoffs of workers, and reduced income.
While a decline in the CPI index may seem positive for consumers, deflation can lead to recessions, triggering job losses and reduced incomes for ordinary people, which is extremely bad for the economy. In recent years, the unemployment rate of urban youth has increased year by year, and the unemployment rate reached the second highest level in history in March this year, especially the unemployment rate in the 16-24 age group is very high, which requires us to be vigilant about the impact of deflation on employment and people's livelihood.
So, how to solve the problem of deflation? The key is to revitalize the existing funds in the market. Although official data shows that there is no deflation problem in China, the M2 money supply has declined, and the effectiveness of monetary policy has been greatly reduced. Banks are facing a heavy lending task, but due to the decline in corporate profits under the background of deflation, investment opportunities are reduced, and consumers are reluctant to lend, resulting in "financial idling" and not really helping the real economy.
To solve the problem of insufficient demand in China's economy, it is relatively simple, first of all, it is necessary to revitalize the stock of monetary funds and make funds flow to the real economy. Second, take the traditional approach of increasing demand through infrastructure investment, export growth and stimulating consumption. The government has adopted a range of policies, but greater stimulus is needed.
For example, the business environment of cities can be further optimized, and policy implementation needs to be improved. On the consumption side, some policies that restricted consumption in the past can be eliminated to support small businesses and the private economy, which has a huge effect on employment and social stability. At the same time, it is necessary to support the development of large enterprises, especially in key areas such as chip research and development, to ensure that funds flow to innovative projects.
In summary, China's economy has a pseudo-deflationary problem, and more measures need to be taken to cultivate market and public confidence in the economy. The government can stimulate consumption and investment by deregulating regulations, simplifying approvals, and reducing taxes, revitalizing the market and improving the transmission effect of monetary policy. Believing in the market, enterprises, and the people is the key to solving the problem of deflation, as long as we adhere to reform, China's economy will surely get out of the haze of deflation and usher in better development prospects. Come on China!
Of course, solving the problem of deflation does not happen overnight, it takes time and determination. In addition to continuing to strengthen policy efforts, the most important thing is to build market and public confidence in the economy. This requires a series of government measures to create a relaxed economic environment where people and businesses have the opportunity to develop and innovate.
First, the government can deregulate and simplify the approval process. Many small businesses and entrepreneurs are often constrained by cumbersome administrative procedures and high approval costs, which hinder their growth. By simplifying the government approval process, the threshold for entrepreneurship and investment can be lowered, and innovation can be stimulated.
Second, the government could consider reducing the tax burden. Tax cuts can increase the profitability of businesses and encourage investment and entrepreneurship. At the same time, tax cuts can also increase people's disposable income and stimulate consumer demand.
In addition, the government can continue to support the development of large enterprises, especially in key areas such as chip research and development. China faces the problem of technology dependence in the chip field and needs large-scale investment to achieve independent research and development. The government can provide more financial support and policy incentives to ensure that funds flow to key projects and improve China's competitiveness in high-tech fields.
Most importantly, the government needs to actively send positive signals to give markets and people confidence in the future of the economy. This means that the government needs to show a strong determination and willingness to do whatever is necessary to stabilize the economy and promote growth. Only when the market and the people see hope will they choose to actively consume and invest, and the market will regain its vitality.
On the whole, solving the problem of pseudo-deflation requires the joint efforts of the government and the market. Governments need to adopt larger policy initiatives, but also need to create a relaxed economic environment to encourage
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