You are using an older browser version. Please use a supported version for the best MSN experience.

China says ‘extraordinary’ coronavirus stimulus policies from US, Europe have ramped up global inflation risks

South China Morning Post logo South China Morning Post 2 days ago
Guo Shuqing wearing a suit and tie: Guo Shuqing, party chief of the People’s Bank of China, says the consequences of US and European stimulus policies are being felt worldwide. Photo: Simon Song Guo Shuqing, party chief of the People’s Bank of China, says the consequences of US and European stimulus policies are being felt worldwide. Photo: Simon Song

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.

The criticism of Western stimulus policy comes at a delicate time for Beijing, as it resumes high-level trade talks with Washington in an effort to reset deteriorating political and economic relations between the two nations.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

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 Shuqing

"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.

China passes anti-sanctions law, providing means to counter foreign measures

Beijing also rolled out massive fiscal and monetary stimulus measures that helped the Chinese economy rebound to 2.3 per cent economic growth in 2020, the only large economy to expand last year. But the measures were less extensive than those from Western nations.

Data released on Wednesday showed China's May factory gate prices rose by 9 per cent from a year earlier, the fastest pace in nearly 13 years, due to surging commodity prices.

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".

Replay Video

Yi said authorities were alert to inflationary pressure because of the pandemic and external uncertainties. But he believed consumer prices would fall and full-year growth will be below 2 per cent, well within the target of around 3 per cent per cent for 2020.

"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.

Last month, it promised to curb commodity prices and prevent inflation, pledging more targeted measures to fight "abnormal trading" and "malicious speculation".

China's top economic planning agency also vowed to crack down on hoarding or any speculative activities in the industrial sector.

More Articles from SCMP

Land clearing for palm oil plantations jeopardises Indonesia’s climate commitments, harms rural communities: report

China to set up special group to enforce anti-sanctions law

China’s new Data Security Law promises steep punishments for unapproved overseas data transfers

China’s yuan could become world’s ‘currency of choice’ by 2050 under dual circulation plan

US urged to abide by one-China principle in top diplomats’ phone call

This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.

AdChoices
AdChoices
AdChoices

More from South China Morning Post

South China Morning Post
South China Morning Post
image beaconimage beaconimage beacon