China’s growth, prices to remain stable amid quality improvement
Some Western media and institutions have been constantly hyping the narrative that “China is experiencing deflation” in an attempt to undermine the Chinese economy and mislead the public. However, considering the actual situation of Western economies, the effectiveness of this smear campaign to mislead the public’s cognition of the Chinese economy is likely to be diminished.
Many Western countries are currently facing stubborn inflation, for example, although the inflation rate in the US has fallen from a peak of 9.1 percent, it has risen again in March this year, with the Consumer Price Index (CPI) rising by 3.5 percent yearon-year, higher than the 3.2 percent in February.
The lingering impacts of the COVID-19 pandemic and the conflict between Russia and Ukraine have led to price surge in the US and Europe, with the ordinary consumers bearing the brunt. When consumers in the US and Europe learn that prices in the Chinese market remain stable, they will wonder how China achieved this. They may also question why their own countries are unable to do the same. And some politicians, media and institutions in the West, in order to distract consumers complains and questioning, had begun to hype the narrative of “China falling into deflation.”
Deflation is undesirable, and China has set a target of 3 percent for controlling the inflation rate this year. The year-on-year GDP growth rate in the first quarter stood at 5.3 percent. The contribution of external demand was 14.5 percent. This indicates that global demand is increasing.
On the other hand, China’s exports of the “new three,” cross-border ecommerce exports, and trade growth with neighboring regions remain strong.
New quality productive forces focus on improving China’s total factor productivity growth, supporting high-quality economic development.
According to the calculations conducted by the National Development and Reform Commission, for every 1 percentage point increase in China’s urbanization rate, it can drive around 1 trillion yuan of new investment demand and over 200 billion yuan of new consumption demand.
By promoting equipment trade-in in seven major areas including agriculture and construction, it is expected to create a market with an annual scale of more than 5 trillion yuan.
By promoting the comprehensive transformation of energy consumption control to carbon emissions, at least 2 trillion yuan of new investment is needed annually before 2030.
With these policy measures being implemented, China has confidence and determination to guarantee this year’s economic growth target of around 5 percent. With the continued growth of the Chinese economy for the rest of this year, restoring confidence and expectations, the “China falling into deflation” narrative will be selfdefeating.
Insufficient demand remains the main issue in the Chinese economy. If the country introduces corresponding measures to address issues such as insufficient demand, this year’s CPI growth rate will be higher than the external predictions.
From 2024 to 2027, China may experience a structural adjustment period similar to the one from 1998 to 2002. After four years of structural adjustment, the Chinese economy is likely to enter a new stage of highquality development. The changes may not be obvious in the short term, but as time goes on, the changes will become apparent.