By Zhang Mengxu
The latest released economic data, including the consumer price index (CPI) and producer price index (PPI) in February, indicate that the profitability of China’s real economy is marching towards a sustainable and healthy direction, economists said.
The CPI, a main gauge of inflation, registered a mild 0.8 percent year-on-year growth, but declined 0.2 percent compared with previous month, the National Bureau of Statistics (NBS) said on Thursday.
The PPI, which measures costs of goods at the factory gate, rose 7.8 percent year on year in February, increasing from 6.9 percent in January.
Sheng Guoqing, a senior analyst with NBS, said that the month-on-month drop of CPI can be attributed to lower vegetable price caused by a sufficient supply resulted from a higher temperature in February.
But the core CPI is still relatively steady when food and energy prices are taken out of the equation, he stressed.
The core CPI in February and January grew 1.8 percent and 2.2 percent respectively, he said, adding that the number maintained a mild growth from last year.
Wang Zhenxia, an associate researcher with National Academy of Economic Strategy under Chinese Academy of Social Sciences (CASS) told the People’s Daily the PPI growth can be attributed to rise of commodity price in global market as well as a low basis at the same period of last year.
Its rising trend since the third quarter of last year proved that the real economy, especially the traditional manufacturing sector, is witnessing an optimization in its profitability, the researcher added.
Wang said that the current CPI data revealed a stable market demand, which means that China will not face big inflation pressure as long as large fluctuations do not happen.
Economists also refuted those voices saying China’s economy is hit by stagflation.
According to them, stagflation only occurs on the preconditions of skyrocketing prices, higher inflation level, soaring unemployment rate, as well as a low or even stagnated economic growth, but sound fundamentals of Chinese economy proved those bearish opinions as groundless.
Data showed that China provided new jobs to 13.14 million urban residents last year, and its registered urban unemployment rate stood at 4.02 percent. Its 6.7 percent economic growth also dwarfed other world economies.
Cai Fang, VicePresident of CASS, said that China’s potential growth would definitely drop after 30-plus years of rapid development since the economy, when coming to the current stage, would see declined working population supply, slower growth in labor productivity as well as dropped investment returns.
“It is neither realistic nor necessary to return to a growth of around 10 percent,” he stressed.
But he also pointed out that a certain growth should be maintained to improve people’s livelihood and ensure employment, and realize the country’s target to double its 2010 GDP and build itself into a moderately prosperous society by 2020. – (People’s Daily)
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