Hitting inflation target is key to China’s other economic goals, adviser says
Economist Zhang Bin says this year’s 2 per cent inflation target ‘corresponds to a state of relative equilibrium between supply and demand’
Achieving this year’s inflation target would be one of China’s top economic tasks, a prominent economist and government adviser said, as it was pivotal to accomplishing other government priorities such as boosting consumption, raising incomes and achieving the required headline growth figures.
“The inflation target corresponds to a state of relative equilibrium between supply and demand,” Zhang Bin, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said on Thursday.
“Among the various macroeconomic objectives, I believe the most crucial one is the inflation target.”
Two per cent is also the level at which the US hopes to cap its inflation.
The annual session of the CPPCC, China’s top political advisory body, convened in Beijing this week alongside that of the National People’s Congress, the country’s legislature. Collectively known as the “two sessions”, they are a key window to understanding Beijing’s policy direction.
“The range represents a feasible target, where the economy will neither overheat nor cool down too much,” Zhang said.
He added that it would also allow China to achieve its long-term goal of having its per capita gross domestic product reach the level of a moderately developed country by 2035.
Zhang said that boosting demand would raise prices, which would, in turn, bolster business earnings and lift workers’ wages, maintaining a reasonable growth rate.