China says ‘extraordinary’ coronavirus stimulus policies from US, Europe have ramped up global inflation risks
- Guo Shuqing, party chief of the People’s Bank of China, says consequences of US and European stimulus policies being felt worldwide
- Despite a short-term rise in global inflation, central bank governor Yi Gang says consumer prices in China are basically under control
China’s financial regulators have again raised concerns about the potential side effects of massive economic stimulus in the West, while calling for the removal of tariffs on Chinese goods to help tame global inflation.
Speaking at a financial forum in Shanghai on Thursday, senior central bank officials also said inflation did not pose a big threat to the world’s second-largest economy, and monetary policy would be kept steady.
Guo Shuqing, party chief of the People’s Bank of China (PBOC) and chairman of the China Banking and Insurance Regulatory Commission, said inflation arrived immediately after the US Federal Reserve and European Central Bank began buying assets to cushion the economic effects of the coronavirus pandemic.
“Those extraordinary measures played a role in stabilising market and investor confidence in the short-term,” Guo said via video link at the Lujiazui Forum.
“However, the negative results are shared by countries all over the world.”
Inflation risks have been mounting worldwide in recent months, leading to worries that a continued increase in commodity prices could weigh heavily on the global economic recovery from the coronavirus.
Guo said the unilateral actions of some developed countries had worsened the situation.
“As a matter of fact, they hurt the interests of their people first. For instance, retaining high tariffs on Chinese products actually made inflation rise faster,” he said, referring to the Biden administration’s decision to keep tariffs imposed by former president Donald Trump.
The official consumer price index, meanwhile, rose 1.3 per cent, the biggest year-on-year increase in eight months.
Despite the short-term rise in global inflation, central bank governor Yi Gang said “there was huge division over whether it will last”.
“China implemented normal monetary policy during the pandemic last year,” he said. “Demand is relatively stable and that will help maintain price stability.”
Still, the recent surge in commodity prices has been high on the agenda of the State Council, the country’s cabinet.