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Experts laud nation's role in recovery, analyze US scene at Beijing seminar Certain policy adjustments might be needed for China to ensure
effective supplies from certain industries to the overall economy and
minimize any possible impact of the recent global commodity price surge
on inflation, experts and industry insiders said. In the second half of the year, uncertainties relating to the global
economy will likely be exacerbated more by any changes in the United
States' macroeconomic policy than developments in China, they said. On Saturday, Xu Gao, chief economist of Bank of China International,
told a seminar in Beijing that China's economic recovery is getting
stronger in both supply and demand. At the event organized by the National School of Development at
Peking University, Xu said restrictive production measures in certain
sectors may have hampered supply capacity of certain industries like
steel. He further said it is advisable that similar restrictive policies
be phased out in a gradual and apt manner to keep the supply side
stable and better defuse inflation. China's producer price index, which gauges factory-gate prices, rose
by 9 percent on a yearly basis in May, up from 6.8 percent in April,
marking the highest level in nearly 13 years, data from the National
Bureau of Statistics showed earlier this month. Xu noted that at regional and local levels, some restrictive policies
on certain industries like iron and steel may have slowed domestic
supply recovery. So, more timely policy adjustments are needed on this
front. Xu warned that while the rise in consumer prices, the main gauge of
inflation, will remain moderate, the rising producer-level prices are
likely to feed into non-food prices and somewhat add to inflationary
pressures. Food prices are likely to remain moderate or stable as hog
prices are currently at a very low level. Xu said he believes the country's overall CPI growth will come in below 3 percent, well within the government target. The US and China, the world's top two economies, are driving the
recovery, Xu said. He said the two economies are recovering in different
ways and complementing the growth of one another. With effective control of the COVID-19 pandemic, China has gained
more than a firm footing on the supply front and has become an effective
manufacturing supplier globally, while the US is showing a robust
recovery on the demand side with its big stimulus－quantitative easing or
QE－putting money directly into households' bank accounts. In China,
more support measures were rolled out to alleviate unforeseen
pandemic-related burdens on businesses. At the Beijing seminar, Liang Zhonghua, chief macro analyst of
Haitong Securities, said that globally, economic uncertainty during the
second half of this year is more likely to come from US policy stance
rather than China's. Liang also said he believes that the US will see a quicker recovery
than most other economies, and conditions for the process of reducing
the US Federal Reserve's debt purchases, known as "tapering", are ripe.
The level of inflation has run well beyond the Fed's 2 percent target
with the US job market getting robust. "If major economic indicators keep strengthening, the Federal Reserve
is likely to send stronger, clearer signals for tapering off," Liang
said. Yet, actual implementation of tapering may not come until late this year, he said. The Global Economic Prospects, released by the World Bank earlier
this month, forecast China's GDP will grow 8.5 percent this year, which
will help a great deal in the recovery of the global economy.
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