Shen Jianguang: whether inflation will become a threat in 2017?
huaerjiejianwen· 2016-12-06 15:15:02
this year, in order to support economic growth, policymakers adopted a proactive fiscal policy and loose monetary policy, the economic rebound, rising asset prices. As of October, CPI returned to more than 2%, rebounded to 2.1%, while the PPI is also the end of the 54 months after the deflation rebounded to 1.2%. The PMI index rebounded in November to 51.7%, the four consecutive month above 50% and the line at the same time, the purchase price index is increased to 68.3%, an increase of 5.7 percentage points compared to October. Under the background of economic stabilization, inflation will become the 2017
threat? In my opinion, in 2017, accompanied by Trump to enhance the positive fiscal inflation pressure, the high real estate price to rent the conduction gradually, rising labor costs, and structural reforms to promote the service industry prices, inflation is expected in 2017 above this year, the whole year or will reach 2.5%, while inflation rebound will cause constraints on monetary policy, making the next easing to neutral.
specific point of view, the reasons for the high inflation next year, mainly in the following points:
first, under the impact of Trump's input inflation pressure.
Trump won the U.S. presidential election than expected, it is expected to take the following three aspects of the policy: first, tax cuts, two of the financial system to relax regulation, the three is to increase investment in infrastructure. And the implementation of these policies will boost commodity demand, support commodity prices, and then push up inflation in the world. In fact, such as copper and other commodity prices have begun to rise sharply.
due to rising commodity will also bring exogenous variables to China caused by supply side shocks, this is due to Chinese PPI largely with the international commodity price movements such as the United States CRB (Commodity ResearchBureau) index to maintain a high degree of correlation (Figure 1), and the rise of PPI will bring the CPI portion of the non food prices. In addition, the existence of the devaluation of the RMB pressure may also increase the supply side impact. The author expects the RMB against the U.S. dollar next year will be reduced to 7.3, the devaluation of the RMB will increase the import price and the deterioration of the terms of trade to put pressure on inflation. Class= img_box "
second, prices soared to push up the rent price.
domestic prices soared this year, until the National Day period, the decision level of intensive real estate regulation and control measures, the rapid rise in prices to ease. Data show that in October Shanghai, Beijing, Shenzhen, Guangzhou four first tier cities grew 27.5%, respectively, 31.1%, 31.7%, and 23.6%. And second tier cities, Hangzhou, Nanjing, Xiamen, Hefei prices rose more than 30%. In contrast, rental prices lag. The index shows that next year is expected housing prices to increase the rent will increase, which will make the overall cost of living and rising production costs, taking into account the rent CPI weight low proportion, this means that the actual inflation may be higher than the published (Figure 2). Class= img_box "
third, the continuous reduction of labor supply.
China's labor force population reached its peak in 2011, followed by a decline in the labor force population. And from the rural transfer of labor situation, China has also crossed the Lewis turning point, which means that the future wage increase will be higher than the speed of productivity. At the same time, along with the continuous progress of anti-corruption and national public officials wages, the wages of this part is expected next year, this part of the specific wages will also be improved. Rising wages increased year by year, impact on the level of inflation can not be ignored (Figure 3). Class= img_box "
fourth, structural reforms to promote the service industry prices.
is not difficult to find that the rising service industry CPI contribution to the overall CPI degree has increased, such as education, culture and entertainment in October CPI and CPI healthcare are a record high of 5 years, the structural reform and service areas are not unrelated. From the medical reform, medical reform in recent years continue to promote, by abnormal system earlier "to take the medicine", to a more market-oriented pricing mechanism, registration fees, outpatient fees have risen, higher spending on healthcare.
based on this, the author expects next year's inflation pressure will rise this year, is expected to be around 2.5% in the year. Of course, concerns about inflation and asset price risk, as well as the rise in interest rates in the United States next year, will restrict the space of China's monetary policy. In fact, credit data in October indicates that the monetary policy started from loose to neutral, while the people's Bank of Chinese released the "2016 third quarter monetary policy report", a rare seven to prevent the risk of a bubble implies that monetary policy easing next year in the limited space, more fiscal policy support infrastructure investment may be important means of steady growth.
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