Recently, I have seen a point of view: China has entered an era of "deflationary prosperity", that is, a good era of stable prices and economic prosperity.
China enters a "deflationary boom"?
The author's view is simple: "through prosperity" is an economic boom during a period of low interest rates, which happens to be a period of low interest rates in recent years, when the People's Bank of China has been cutting interest rates continuously, and the CPI index, that is, prices, has remained stable for a long time since last year, which has a bit of a "deflationary" flavor.
Therefore, it believes that China has entered the stage of "deflationary prosperity", and this cycle has just begun.
So, is this view correct? What is China's price and economic growth rate? How can we ordinary people better adapt to the "deflationary boom"? Today we will talk about these topics together, welcome to like, forward, and favorite.
China, which does not need deflationary prosperity
Despite the word "prosperity", it is clear that China's economy does not need a deflationary boom.
Starting in 2023, China's CPI index was once below 1%, and even entered an era of negative growth, when the National Bureau of Statistics directly stated: China has not entered deflation, and will not enter a deflationary cycle in the future.
There is no deflation in China's economy at present, and there will be no deflation in the next stage
At a press conference at the beginning of this year, the governor of the central bank clearly mentioned the main measures to prevent deflation, including providing a stable monetary environment, promoting price recovery, optimizing monetary policy, and so on.
In addition, as mentioned in this year's government work report, our CPI target is 3%, so deflation is not what China's economy wants to see, nor is it the goal we want to achieve.
However, there is actually a gap between the reality and the target, and the CPI data of the last year shows that it is indeed difficult for China's CPI to exceed 1%, which means that China's inflation basically no longer exists, and even if it is not deflation, it has entered the era of "quasi-deflation".
CPI data for May is released
On the one hand, the CPI is stable, and on the other hand, China's GDP growth rate is 5.3%, just from the numbers, we are indeed "prosperous on the one hand" and "deflation on the other".
What kind of social situation will this bring? To put it simply, it is the real economic growth brought about by the rapid increase in the size of money and the rapid growth of the volume of goods and services.
To put it simply, the purpose of the central bank's interest rate cut is to ensure and stimulate China's economic growth, and the interest rate cut will provide the market with an excess money supply, which creates GDP, which leads to the growth of China's economy.
The second is the rapid growth of the volume of goods and services, although we feel that the economy is very difficult, employment is not good, and there is no money, but the actual sales of goods are still increasing.
For example, from June 1 to 18, the national express delivery business volume completed 4.678 billion pieces, a year-on-year increase of 48.66%, which shows that this year's 6.18 sales are actually much larger than last year's, and the sales volume is also very good, and it is not as bad as we think.
The e-commerce economy is good, and the volume of express delivery business has increased significantly.
That is, the growth of the real economy has partially slowed down and has become an e-commerce economy, but the e-commerce economy is also a part of the economy, so the GDP growth rate is growing rapidly, but the perception of third-, fourth- and fifth-tier cities and offline entities is relatively slow.
It is these two parts of GDP that have led to the sustained and stable development of China's economy.
However, there is a problem with the "deflationary boom", that is, the macro is stable and the micro is poor. What does that mean? That is, the macroeconomic data generally looks good, but the micro data, that is, the experience of people's livelihood, is very poor.
This is in line with our realistic perception, after all, since the epidemic in 2020, it has become more and more difficult to find a job every year, and it is also more and more difficult to do business.
What does this mean? It shows that although the fundamentals of China's economy are stable, it does not mean that every aspect is good, when there are problems in some industries, and these industries happen to be close to the lives of ordinary people, we will feel the "chill" of the economy.
The issue of employment is an issue of people's livelihood
Although for the country as a whole, this kind of overall stability is something that many people want to see, most of us are ordinary people who do not work in the system and are not ordinary people who guarantee income during droughts and floods.
Reject deflationary prosperity! How to break the "chill" of microeconomics?
So it's very simple, we want prosperity, but we don't want "deflation". So what we have to do is to break the microeconomic "chill" through a series of means when the fundamentals are stable.
How? There are several good methods here, and the main core of these methods is to "increase residents' income".
At present, the most important point is to win the "real estate defense war", why do you say that? The first is the industrial chain of real estate, which accounts for a large part of China's economy, accounting for nearly 20% of GDP in its heyday, which can be said to be the pillar of China's economy.
Real estate is not only about GDP, but also about people's livelihood and employment
Not only that, real estate involves a lot of jobs, so the purpose of saving real estate is not to make housing prices rise and make people unable to buy houses, but precisely because they need to absorb employment and let people increase their economic income.
In addition, China's middle class has also "collapsed" in recent years, and the core root lies in the family assets of Chinese residents, most of which are fixed assets, that is, houses.
Housing prices have fallen so much in recent years, and many middle classes, in fact, have not fallen, and they have also fallen back to loans, at this time their pressure will be very great, and many places have been caused by the collapse of housing prices, resulting in extreme behavior.
Therefore, real estate involves not only housing prices, income, jobs, but also the livelihood of all people.
Second, it is necessary to increase residents' income and promote employment through multiple channels.
At the national level, it is necessary to continuously raise the minimum income standard, especially to tilt fiscal revenue towards the poor people and underdeveloped areas.
The minimum wage standard has been adjusted in many places.
Because the living conditions of this part of the population are not good, after getting the money, they will generally spend it quickly, instead of saving it for interest like the rich, and the effect of such a financial transfer is very good. This is also the purpose of "common prosperity" that we have been engaged in.
Second, it is necessary to vigorously promote tax and fee reductions. For example, last year, the amount of tax and fee reductions was as high as 2.2 trillion yuan, which effectively promoted market confidence and reduced the burden on enterprises and individuals. So this year and even later, can we continue to promote this policy, or even vigorously strengthen this policy? This is also a way to increase the income of residents.
In terms of promoting employment, it is very complicated, because there are many college students in China, and we must not only improve the employment rate, but also improve the quality of employment, but the involution of 996 is also very serious, and college graduates are not only difficult to find jobs, but also have low wages.
Therefore, this means that, on the one hand, we must continue to open up new markets and industries, develop some industries involved in new quality productivity, and also open up the markets in the Middle East, Africa and Europe, so that Chinese products can go to all over the world, so that we can have more employment opportunities.
Going out is an important solution for China's economy to strengthen
On the other hand, what we need to do is reform the distribution of income. For example, the proportion of the "labor income" of our workers in the primary distribution has decreased from 56.9% to 55.8% in 22 years. This means that the proportion of employment income of migrant workers is declining.
Therefore, how to narrow the gap between the rich and the poor, take into account social productivity at the same time, take into account fairness, and even consider the levy of a "tax on the rich"? To subsidize ordinary people? This needs to be studied and come up with a set of solutions.
People's livelihood is the foundation of society
In addition to increasing income and employment opportunities, if we want to drive away the chill of the microeconomy, we must solve people's livelihood problems, such as social security and pension issues, such as medical insurance and employment issues, which are all big things that involve our "old age".
For young people, the current environment for marriage and childbirth is very poor, and people can't afford to give birth, can't afford to raise, and don't have time to raise, resulting in a declining fertility rate and an aging population in China. This forces the government to increase support for childbirth and introduce various preferential measures, otherwise, the state of not wanting to give birth and not daring to give birth will continue.
The macro economy should be good, and the micro people's livelihood should also be good!
To get back to the point, in fact, Europe, the United States and Japan have already experienced an "era of deflationary prosperity" a few years ago, but we have also seen the consequences, that is, young people are not vigorous, the gap between the rich and the poor in society is widening, young people are lying flat, and society is declining.
Therefore, the macro economy must indeed be protected, but the micro economy and social livelihood still need to be strengthened!
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