Chinese ‘superiority’ keeps its inflation low, economic planner boasts as US prices keep rising

‘Preventing imported inflation’ and domestic inflation are key to keeping China’s economy in reasonable range, Premier Li Keqiang warns

China’s top economic planning agency is watching pricing trends of commodities while strengthening market controls, with focus on critical staples: grain, pork and coal

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The prices paid by Chinese consumers have stayed relatively low compared with what Americans are facing. Photo: Xinhua

Published: 5:30am, 15 Jul 2022Updated: 9:35am, 15 Jul 2022

With consumer prices continuing their skyward trajectory in the United States, reaching a nearly 41-year high, China is becoming increasingly vigilant and wary of “uncertain and unstable factors” that could affect its own prices in the second half of the year.

The warning on Thursday, from the country’s top economic planning agency, came after Premier Li Keqiang flagged “imported inflation” at a symposium where China’s economic situation was discussed with economists and entrepreneurs, according to state media reports.

“To keep the economy running within a reasonable range … we should not only stabilise growth but also prevent inflation and pay attention to preventing imported inflation,” official broadcaster CCTV quoted Li as saying at the Tuesday event.

Beijing has thus far managed to keep its price increases much lower than other major economies, as it strives to achieve robust annual economic growth. But America’s hotter-than-expected consumer price index (CPI) in June has fuelled bets of the US Federal Reserve implementing a more aggressive monetary tightening policy.

Such a shift by the Fed would further put pressure on the global economy.

The US reported on Wednesday that its June CPI soared by 9.1 per cent from a year earlier – well above the market-estimated 8.8 per cent increase.

International inflation, coupled with the war in Ukraine and ever-present coronavirus threats are likely to continue heaping pressure on China’s economy, according to Wan Jinsong, director of the pricing department at the National Development and Reform Commission.

“In the second half of the year … China’s goods prices will still be faced with many uncertain and unstable factors,” Wan said on Thursday.