Before the outbreak of the 2008 global
financial crisis, the Chinese Government had already begun to
practice macro-control on the economy in the hope of transforming
China's economic mode. The government wanted to avoid high
pollution and energy consumption and stimulate domestic demand.
These adjustment measures are now taking effect. In the first
quarter of 2012, China's economic growth rate was stable while
inflation dropped on the whole.
This momentum further proves that the Chinese
economy is coming for a "soft landing," not the "hard landing" some
had predicted. This is good news to the world economy. When the
Chinese economy takes a healthier way of development, it will
contribute more to the world economy.
Chinese entrepreneurs appear to be more
optimistic about China's upward economy. According to the Chinese
SME Confidence Index issued by Standard Chartered Bank on April 9,
in the first quarter of 2012, SME Confidence Index is 57.63
percent, up by 3.06 percentage points over the previous quarter.
China's official purchasing managers' index for March is 53.1
percent, up by 2.6 percentage points over the beginning of this
year. The new order index for March is 55.1 percent, a jump of 4.1
percentage points over the previous month.
It's good to see China developing with a high
economic growth rate, a successful transition in accordance with
the Central Government's macro-control plan. Meanwhile, relevant
departments should always keep alert to various problems in
economic development, particularly new situations erupting under
macro-control, to avoid deviation of the control policies.
The macroeconomic statistics released in March
revealed that the country's macroeconomic control is faced with
huge pressures. On one hand, the Producer Price Index (PPI) dropped
for the first time in 28 months; on the other hand, the Consumer
Price Index (CPI) rose by 3.6 percent over the same period of time.
The gap between PPI and CPI is expanding.
This is an abnormal phenomenon. The drop in
PPI shows insufficient demand from real economy, which makes it
difficult for businesses to transfer the pressure of rising
upstream costs. The unexpectedly high CPI increase tells that the
shadow of inflation is retreating reluctantly.
This reminds us China should not be too
optimistic in maintaining stable economic growth and curbing
inflation. When demand-pull inflation, currency-related inflation
and imported inflation are retreating, cost-push inflation is
approaching. The Central Government may have already been aware of
this and set out to address it.