China has entered an era of low consumer prices

%3CP%20align%3Dcenter%3E%3CIMG%20border%3D0%20src%3D%22/new_maoyi_en/cn/admin/news/NewsFile/-1/20128994139686.jpg%22%20width%3D500%3E%3C/P%3E%0D%0A%3CP%20align%3Dcenter%3E%3CFONT%20face%3DVerdana%3EChina%20has%20entered%20an%20era%20of%20low%20consumer%20prices.%28Photo/People%27s%20Daily%20Online%29%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EChina%u2019s%20National%20Bureau%20of%20Statistics%20%28NBS%29%20will%20release%20the%20July%20economic%20data%20on%20Aug.%209%2C%20which%20will%20answer%20such%20questions%20as%20whether%20the%20Chinese%20economy%20will%20turn%20around%20after%20the%20central%20government%20reaffirmed%20maintaining%20stable%20growth%20as%20a%20top%20priority%2C%20whether%20China%20has%20entered%20an%20era%20of%20low%20consumer%20prices%2C%20and%20whether%20Chinese%20companies%20will%20survive%20the%20hard%20times.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20NBS%20is%20expected%20to%20release%20a%20monthly%20report%20covering%20the%20country%u2019s%20key%20economic%20indicators%20such%20as%20the%20Consumer%20Price%20Index%20%28CPI%29%2C%20Producer%20Price%20Index%20%28PPI%29%2C%20output%20of%20major%20industrial%20enterprises%2C%20fixed-asset%20investment%2C%20total%20retail%20sales%20of%20consumer%20goods%2C%20and%20real%20estate%20investment%20and%20sales.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CSTRONG%3EStagflation%20risks%20rising%20in%20China%20%3C/STRONG%3E%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EMost%20market%20analysts%20forecast%20the%20year-on-year%20growth%20rate%20of%20China%u2019s%20July%20CPI%20to%20fall%20back%20below%202%20percent.%20After%20the%20CPI%20slid%20to%20a%2029-month%20low%20in%20June%2C%20overall%20food%20prices%20in%20the%20country%20were%20stable%20in%20July%20despite%20minor%20fluctuations%2C%20which%2C%20along%20with%20the%20easing%20carry-over%20effect%2C%20may%20drive%20the%20CPI%20growth%20rate%20in%20July%20down%20to%20a%20new%20low%20of%20around%201.7%20percent.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CIt%20is%20certain%20that%20China%20has%20entered%20an%20era%20of%20low%20consumer%20prices%2C%u201D%20said%20Sun%20Lijian%2C%20deputy%20dean%20of%20the%20School%20of%20Economics%20at%20Fudan%20University.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ESun%20believes%20the%20main%20reason%20for%20the%20declining%20CPI%20is%20not%20the%20easing%20carry-over%20effect%2C%20but%20the%20continued%20weak%20market%20demand.%20%u201COn%20the%20one%20hand%2C%20there%20is%20a%20lack%20of%20real%20demand.%20On%20the%20other%20hand%2C%20investment%20demand%20has%20fallen%20further%20mainly%20due%20to%20the%20rising%20worries%20over%20domestic%20and%20global%20economies.%u201D%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CAt%20present%2C%20the%20Chinese%20economy%20is%20indeed%20facing%20the%20problem%20of%20insufficient%20consumer%20demand%2C%u201D%20echoed%20Liu%20Xintian%2C%20chief%20analyst%20at%20SunSirs%2C%20a%20leading%20provider%20of%20bulk%20commodities%20information%20and%20prices%20in%20China.%20%u201CThe%20economic%20stimulus%20policies%20introduced%20during%20the%2011th%20Five-Year%20Plan%20period%20%282006-2010%29%20boosted%20domestic%20consumer%20demand%2C%20but%20also%20over%20drafted%20people%u2019s%20purchasing%20power%2C%20leading%20directly%20to%20current%20weak%20consumer%20demand.%u201D%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EMany%20analysts%20take%20the%20declining%20CPI%20as%20a%20worrying%20sign%20of%20deflation%20in%20China%2C%20but%20Sun%20disagrees%2C%20saying%2C%20%u201CChina%u2019s%20economy%20is%20undergoing%20stagflation%20rather%20than%20deflation.%20The%20country%u2019s%20excess%20money%20supply%20remains%2C%20and%20liquidity%20funds%20continue%20to%20exist%2C%20but%20has%20not%20entered%20the%20real%20economy.%20Inflation%20risks%20are%20still%20high.%u201D%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CAt%20present%2C%20there%20are%20a%20large%20number%20of%20liquid%20funds%20that%20are%20not%20enthusiastic%20about%20investing.%20Just%20because%20we%20fail%20to%20see%20them%20in%20stock%20markets%20or%20banks%20does%20not%20mean%20they%20do%20not%20exist.%20For%20instance%2C%20a%20city%u2019%20real%20estate%20sector%20will%20receive%20a%20massive%20capital%20influx%20if%20property%20control%20eases.%20The%20situation%20will%20get%20out%20of%20control%20once%20the%20large%20amounts%20of%20idle%20funds%20are%20unleashed%20to%20enter%20the%20virtual%20economy%2C%u201D%20Sun%20said%20worriedly.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CSTRONG%3EStabilization%20of%20Chinese%20economy%20lacks%20momentum%20%3C/STRONG%3E%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EIn%20addition%20to%20the%20CPI%2C%20the%20PPI%20is%20also%20a%20key%20economic%20indicator%20that%20deserves%20special%20attention.%20The%20profits%20of%20China%u2019s%20major%20industrial%20enterprises%20reached%202.3%20trillion%20yuan%20in%20the%20January-June%20period%2C%20down%202.2%20percent%20from%20a%20year%20earlier%2C%200.2%20percentage%20points%20lower%20than%20the%20decline%20registered%20in%20the%20January-May%20period.%20Their%20profits%20have%20fallen%20for%20five%20consecutive%20months%2C%20but%20the%20pace%20of%20decline%20has%20eased%2C%20indicating%20the%20economy%20is%20gradually%20stabilizing.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CStructural%20problems%20are%20another%20challenge%20facing%20the%20Chinese%20economy.%20The%20PPI%20will%20rise%20up%20to%200.5%20percent%20both%20from%20a%20year%20earlier%20and%20from%20June%20this%20year.%20The%20economy%20showed%20signs%20of%20stabilization%20in%20July%2C%20but%20lacked%20momentum.%20The%20economy%20may%20reach%20a%20small%20climax%20in%20late%20August%2C%u201D%20Liu%20predicted.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAccording%20to%20data%20from%20SunSirs%2C%20China%u2019s%20Bulk%20Commodity%20Index%20%28BCI%29%20rose%200.98%20percent%20in%20July%20to%200.04%2C%20suggesting%20that%20the%20country%u2019s%20manufacturing%20expanded%20compared%20to%20the%20previous%20month%2C%20and%20its%20economy%20is%20stabilizing.%20The%20BCI%20for%20the%20first%2010%20days%20of%20July%20rose%200.68%20percent%20to%200.11%2C%20higher%20than%200.04%20for%20the%20entire%20month%2C%20reflecting%20that%20the%20economy%20lacked%20momentum%20in%20stabilizing.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CSome%20people%20say%20China%u2019s%20era%20of%20rapid%20economic%20growth%20has%20ended.%20I%20cannot%20agree%2C%u201D%20Sun%20said%20so%20despite%20the%20relatively%20weak%20economic%20data.%20%u201CChina%20can%20still%20maintain%20rapid%20economic%20growth%20for%20a%20long%20time.%20On%20the%20one%20hand%2C%20the%20Chinese%20economy%2C%20which%20used%20to%20mainly%20rely%20on%20extensive%20growth%2C%20has%20much%20room%20in%20improving%20production%20efficiency%20and%20increasing%20the%20added%20value%20of%20products.%20On%20the%20other%20hand%2C%20China%20is%20suffering%20from%20labor%20shortages%20partly%20due%20to%20flawed%20resource%20allocation.%20Certain%20low-efficiency%20and%20low-benefit%20investment%20projects%20occupy%20a%20large%20number%20of%20workers.%20Once%20the%20Chinese%20economy%20shifts%20from%20extensive%20to%20intensive%20growth%20as%20well%20as%20completes%20industrial%20restructuring%20and%20upgrading%2C%20the%20country%20will%20regain%20its%20rapid%20growth%2C%u201D%20Sun%20said%20firmly.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%u201CThe%20key%20is%20not%20monetary%20policy%2C%20but%20fiscal%20policy%20such%20as%20tax%20breaks.%20The%20government%20should%20strengthen%20efforts%20to%20save%20companies%2C%20reduce%20production%20costs%2C%20and%20improve%20production%20efficiency.%20Only%20by%20driving%20more%20capital%20into%20the%20real%20economy%20will%20China%20regain%20rapid%20economic%20growth%2C%u201D%20Sun%20said.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CBR%3E%uFF08People%u2019s%20Daily%uFF09%3CBR%3E%3C/P%3E%3C/FONT%3E