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ReturnChina unlikely to have inflation, expert
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admin
PublishDate：
2006-09-13 16:30:00
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Chinanews, Beijing, Sept. 12 – Director of the Finance Research Institute of the Chinese Academy of Social Sciences Li Yang recently said that China is unlikely to have inflation.
He made the statement in an interview given to a reporter from the People’s Daily Overseas Edition.
Li said that since the mid-1990s, China has not encounter any remarkable inflation. Statistics show that since the mid-1990s, consumer price has not risen much and their average annual growth has been kept below 3%. Any economist can tell it is in fact a very moderate growth.
He added that any economist who knows about macro economy understands that a steady and moderate inflation is most favorable to the economy. Under a moderate inflation, enterprises are motivated to make investment and increase their production. Only if there is production and production expands will it be possible to increase employment, and only if there is more employment will economic growth be possible. With sufficient employment and economic growth, people can raise their income and improve their living standard.
In around 2004, many people said that consumer price had risen substantially. However, the expert said that in his opinion, the actual situation was not that serious as some people said. He said that since the mid-1990s, inflation has always been kept at a reasonable degree in China and the trend will continue in the near future.
The reason for this is that since the mid-1990s, the total amount of deposit in China has exceeded the total amount of investment, and everybody knows that when deposit exceeds investment, it means that overall supply exceeds overall demand. Under this situation, it is very unlikely for big inflation to occur, he said.
He made the statement in an interview given to a reporter from the People’s Daily Overseas Edition.
Li said that since the mid-1990s, China has not encounter any remarkable inflation. Statistics show that since the mid-1990s, consumer price has not risen much and their average annual growth has been kept below 3%. Any economist can tell it is in fact a very moderate growth.
He added that any economist who knows about macro economy understands that a steady and moderate inflation is most favorable to the economy. Under a moderate inflation, enterprises are motivated to make investment and increase their production. Only if there is production and production expands will it be possible to increase employment, and only if there is more employment will economic growth be possible. With sufficient employment and economic growth, people can raise their income and improve their living standard.
In around 2004, many people said that consumer price had risen substantially. However, the expert said that in his opinion, the actual situation was not that serious as some people said. He said that since the mid-1990s, inflation has always been kept at a reasonable degree in China and the trend will continue in the near future.
The reason for this is that since the mid-1990s, the total amount of deposit in China has exceeded the total amount of investment, and everybody knows that when deposit exceeds investment, it means that overall supply exceeds overall demand. Under this situation, it is very unlikely for big inflation to occur, he said.
