China’s 2022 plans come with one eye on US policies, pandemic’s evolution, former central bank adviser says

Yu Yongding is on Team Transitory when it comes to inflationary pressure, and the prominent government adviser dismisses risk of stagflation

Western countries’ cautious handling of the stimulus exit appears to have lowered market expectations for a new ‘taper tantrum’

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Yu Yongding, a former member of the Monetary Policy Committee of the People’s Bank of China, says there could be some inflationary pressure next year, but it is not stagflation. Photo: Bloomberg

Published: 10:15pm, 12 Nov 2021Updated: 4:17am, 13 Nov 2021

US policies and the evolution of the coronavirus pandemic will be instrumental in dictating how the Chinese and global economies will fare next year, a prominent Chinese government adviser said on Friday.

However, stagflation or a taper tantrum – instability in capital markets due to an easing of US stimulus measures – is unlikely, added Yu Yongding, a senior fellow with the Chinese Academy of Social Sciences and a former adviser to the Chinese central bank, who was speaking at this year’s online Caixin Summit.

His comments come as Beijing prepares to draft its economic policies for the new year, with issues such as the Federal Reserve’s taper plan, inflation, global economic recovery and US relations likely to dominate the outcome of new policies.

“The biggest uncertainty lies in the coronavirus pandemic,” Yu said during a Caixin Summit panel discussion. “There could be some inflationary pressure next year, but it is a transitory, not stagflation.”

Chinese authorities are now busy trying to contain coronavirus outbreaks in Beijing, Dalian and Chengdu, as the central government continues to maintain a zero-tolerance approach to the pandemic, thus heaping pressure on the country’s economic growth and international exchanges.