China is not the cause of global inflation

International inflation is increasing slightly. Some overseas research institutions argue that the cause is an increase in the price of Chinese commodities. To find out more about this issue, reporters interviewed Zhang Anyuan, a doctor of economics with the National Development and Reform Commission.

Reporter: Has the international inflation situation become more serious recently? Is it true that the cause of the inflation is an increase in the price of Chinese commodities?

Zhang: Inflation has been a serious issue since the beginning of this year; reducing inflation tops every country's economic policy. The US Consumer Price Index (CPI) was 206.7 in August, compared to 202.6 in January. The rate of inflation in Europe is even higher than the 2 percent set by the EU central bank. Some say it is impossible for the rate of inflation in the EU to fall back below 2 percent. Japan's CPI began to rise after a period of decline in April, which meant the end of economic deflation. In July, Japan concluded its long-standing zero-interest policy.

The price of crude oil has fallen recently, but there has been no sign of its impact on the CPI.

Some overseas research institutions are suggesting that the cause of inflation is an increase in the price of Chinese commodities, but I don't think there is any basis for this suggestion. Statistics from Customs show that the price of commodities exported from China has not increased overall. An increase in prices in the second half of this year should take into account fluctuations in the price of exported commodities in the first half of this year.

Middlemen from other countries manipulating prices

Reporter: Is there any evidence to show that China is not responsible for inflation in other countries?

Zhang: Firstly, China's economy is not strong enough to reverse either international inflation or deflation. Secondly, inflation in China has not risen recently. Thirdly, as we all know, the prices of China's everyday-use free on board (FOB) commodities are just a fraction of the terminal prices in the grocery markets overseas. The middlemen are behind rising prices. Finally, processing trade makes up half of China's exports. This trade is manipulated by transnational companies. China is just the workshop for this trade; the workshop does not set the price. China does, however, influence the international prices of raw products like energy resources, but the inflation indexes of each country do not include energy prices.

Reporter: Where has the idea that China is to blame for international inflation come from?

Zhang: The 'China threat' theory continues to haunt some countries. A few years ago, some people argued that international deflation was caused by cheap exports from China. Later, the rising price of primary products made many opportunities available to developing countries, which China supported. However, they turned a blind eye to this. On the contrary, they said China was monopolizing international resources. Now, they are blaming international inflation on standard price fluctuations in China's export prices.

Reporter: What is the main cause of international inflation? Which kind of role does China play?

Zhang: The formation and spread of international inflation is the result of economic growth in every country and the spread of globalization. Although this period of economic growth has continued for some time, periodicity will eventually play its role in the market economy. Inflation and anti-inflation measures taken by the government will take the place of natural periodicity. Furthermore, high oil prices push up the price of other goods too.

China is on its way to becoming the dominant influence on the growth of the global economy. China is cautious about its role in the global economy and hopes to make some contribution to the world economy. However, the power of one country alone is not enough to reverse a trend in the international economy. All the countries should accept this, and cooperate with each other. Complaining and shifting blame makes no sense.

Reporter: Please forecast the relationship between China and international prices in the next phase.

Zhang: An increase in the rate of inflation will not occur in China; global inflation will increase but slowly during China's 11th five-year plan. China's proportion of import and export trade will grow and China's domestic prices will play a bigger role in international market prices.

By People's Daily Online