The recovery in China’s economy is expected to cool global inflation rather than drive it up, with growth and overall prices in the country remaining moderately stable, economists and analysts said.
Xing Hongbin, Morgan Stanley’s chief China economist, said China’s reopening will help contain a global inflation surge, as the normalisation of economic activity will stabilise supply chains and allow them to function more efficiently. This will avoid supply shocks related to global supply, which is one of the drivers of inflation, he added.
Many economies around the world have experienced their biggest inflation surge in 40 years over the past year as energy and food prices spiralled out of control amid geopolitical tensions and massive fiscal and monetary stimulus in many countries.
Against this backdrop, China, the world’s second largest economy, has successfully tackled inflationary pressures by stabilizing the prices and supply of daily necessities and commodities through effective government measures.China’s consumer price index, a main gauge of inflation, rose 2 percent year on year in 2022, far below the country’s annual inflation target of around 3 percent, according to the National Bureau of Statistics.

Looking ahead to the full year, Xing said he believes inflation will not become a major problem for China in 2023, and the country will keep the overall price level stable within a reasonable range.
Commenting on concerns that a recovery in the world’s second-largest economy could push up global commodity prices, Xing said China’s rebound would be mainly driven by consumption rather than strong infrastructure spending.
”This means that China’s reopening will not push up inflation through commodities, especially as the US and Europe are likely to suffer from weak demand this year,” he said.
Lu Ting, chief China economist at Nomura, said the year-on-year increase was mainly driven by the timing of the Chinese New Year holiday, which fell in January this year and February last year.
Looking ahead, he said his team expects China’s CPI to edge down to 2 percent in February, reflecting some pullback after the impact of January’s Lunar New Year holiday. China will target an inflation rate of around 3 percent for the whole of this year (2023), according to the government work report delivered at the 14th National People’s Congress in Beijing on Thursday.——096-4747 and 096-4748