After the Central Economic Work Conference ended on December 5th, monetary policy was "tight" from behind the scenes to the stage. In the face of rapid economic growth for five consecutive years, China's economy is just like a balloon that is expanding bigger and bigger. How to channel its internal and external pressures in an orderly manner has become a difficult problem.

in the short term, the situation is not optimistic. After the CPI growth climbed to 6.5% in August, it fell back to 6.2% in September, which made many people think that the inflation peak may have passed, but the reappearance of 6.5% in October undoubtedly made the previous judgment seem too optimistic. According to the forecast of Goldman Sachs Economic Research, CPI growth will reach 6.7% and PPI will reach 3.5% in November. No matter how much we doubt or even question this figure, the inflation situation is not optimistic, which may be recognized by most people.

the tightening policy will definitely get stronger, but the choice of means may be more important. Whether it is to control the growth rate of credit, fixed assets investment, or energy conservation and emission reduction, there can be market-oriented and administrative means. Compare the two. In the end, which is better or worse also needs to be analyzed according to the specific situation. However, economic theory and the experience of reform and opening up tell us that although administrative means can sometimes have immediate effects, its cost is also quite high. Therefore, before the market means are exhausted, administrative means are generally prudent.

However, the problem is the problem. In the long run, there are still many favorable factors for China's economy. In fact, many macro-economic problems today are more or less caused by the rapid economic growth in China, although this is an unbalanced growth. But if you think about it carefully, the troubles caused by unbalanced economic development are always better than the disappointment caused by stagnant economic development. In order to look forward to the economic growth in the next year in the new policy environment, the newspaper has launched a series of "28, tight money", the first issue of which is Yu Yongding, director of the Institute of World Economics and Politics of China Academy of Social Sciences, on the analysis and forecast of China's overall macro-economy in 28, and next week, an article on the total credit control by Dr. Shen Minggao, an economist of Citibank (China) Co., Ltd. will be published. Readers are welcome to write and communicate, and the email address is guchongqing@gmail.com. (Text/Gu Chongqing)

China's economy has maintained an economic growth rate of over 1% for five consecutive years, while the inflation rate has remained at around 3%. However, in recent months, the inflation rate has obviously increased, and some anxiety has appeared among the public. It should be said that China's economy is entering a new stage, a more subtle stage. At this stage, we need to make adjustments and prepare for some unexpected events. Recently, discussions among economists in China and between economists in China and decision makers in relevant departments have involved many issues. This paper attempts to summarize and generalize these problems and make them into ten problems in order to cause more in-depth discussion. These ten questions are:

First, has the potential economic growth rate of China increased from 8% to 9% to 1%-11%?

second, is the current inflation in China isolated, one-off, or widespread, which is both demand-driven and cost-driven?

Third, what is the tolerance of inflation to achieve relative price adjustment? In other words, how much room is there for adjusting relative prices while keeping prices basically stable?

Fourth, is there a serious bubble in China's capital market? Should the government adopt a laissez-faire policy of non-intervention in the ups and downs of capital market prices?

fifth, is the growth rate of fixed assets investment in China too fast?

Sixth, is there an alternative relationship between inflation and exchange rate appreciation, and should inflation be tolerated in exchange for exchange rate stability?

Seventh, is there any room for China to raise interest rates under the condition that the spread between China and the United States is narrowing and the appreciation of RMB is given?

Eighth, in order to maintain the stability of RMB exchange rate, should China accelerate the pace of capital liberalization so as to reduce the pressure of appreciation?

Ninth, is the capital control in China still effective? Should we strengthen the management of cross-border capital flow or lift the capital control as soon as possible?

tenth, where is the source of liquidity in China?

1. Has the potential economic growth rate of China increased from 8%-9% to 1%-11%?

Until 23, it was recognized that the potential economic growth rate of China was 7-8%. In the 11th Five-Year Plan, the China Municipal Government actually has a potential economic growth rate target, which is lower than 8%. In 24, the government also proposed that the economic growth rate of China should be maintained at around 7%.

Since 23, China's economic growth has shown an unprecedented momentum: the economic growth rate has exceeded 1% for five consecutive years, and there is no serious inflation. People will naturally ask: Has China's potential economic growth rate improved significantly? I think there is improvement, but I don't believe there is a big jump, and it is unlikely to jump from 7 ~ 8% to 1 ~ 11%. Recently, China's economic growth has accelerated, which is the result of periodic changes to some extent. After 6~7 years of deflation, it is natural that the economy experienced rapid growth driven by investment in 23~24. The elimination of "bottleneck" after 25 enabled 26 to maintain low inflation and high growth. There are both trend changes and cyclical factors in economic growth, which must be separated to determine the potential economic growth rate of China. If the current economic growth rate is 11.5%, it is not prudent to assert that the potential economic growth rate of China has reached 1 ~ 11%. Inflation will not appear immediately with the rapid economic growth, but will lag for a year or more. If the macroeconomic policy objectives are determined based on the current economic growth rate, the consequences are likely to be further overheating of the economy. Anti-inflation policy can't wait until the signs of inflation are obvious. What's more, the current inflation rate in China has obviously exceeded the control target at the beginning of the year, and it is in danger of rising further.

2. Is the current inflation in China isolated, one-off, or widespread, with both demand-driven and cost-driven characteristics?

Two months ago, many economists still thought that there was no inflation problem in China, and the increase in CPI was largely a one-off event, which was caused by the increase in pork and food prices. Therefore, foreign countries call China's inflation "piggy cycle". I think inflation in China is actually quite serious, and its development prospect is worrying. Is this worry unfounded? Not necessarily. The reasons are as follows:

First, the economic growth rate of China has obviously exceeded the potential economic growth rate. According to general economic theory, the occurrence of inflation generally lags behind for a period of time, while the situation of high growth and low inflation in China has been several years.

second, the prices of agricultural products are generally rising instead of individual ones. Not only the prices of agricultural products are rising, but also the input prices of agricultural products are generally rising. The increase of agricultural product prices is not unrelated to the decrease of cultivated land area and the increase of agricultural product prices around the world. So it is hard to believe that by increasing the number of live pigs, we can solve the current problem of rising prices of agricultural products. Now PPI has also started to rise. All these indicators tell us that we must be highly vigilant about the long-term and persistent nature of inflation.

thirdly, what is even more worrying is that inflation expectations have been formed among ordinary people, and anxiety about rising inflation is spreading. Even if this sentiment is based on wrong judgment, once the inflation expectation is formed, it will be difficult to get rid of it. The formation of expectation will change the public's behavior and make the deterioration of inflation difficult to avoid.

fourthly, in recent years, the growth rate of wages and salaries is obviously higher than that of labor productivity. The vicious circle of "inflation-inflation expectation-wage and salary rise-inflation" is forming, or has already formed.

Fifth, there is a serious price distortion in China. Therefore, it is necessary to adjust the relative price. Under the realistic conditions of China, the adjustment of relative prices will inevitably increase the pressure of inflation.

Sixth, although the statement that "inflation is a monetary phenomenon at any time and anywhere" may not be true, it is undeniable that inflation is closely related to monetary phenomena. At present, the growth rate of money supply in China is 18%, which shows that inflation is supported by money. The negative interest rate is the power source to promote inflation.

Seventh, in recent two years, the stock market has been very hot (now it seems that it has begun to cool down), the real estate market price has been soaring, and the wealth effect of China cannot be underestimated.

Eighth, there is an obvious inflation trend all over the world. The prices of raw materials, oil and agricultural products are rising. China is one of the most open economies in the world. The general increase in global prices will inevitably have a serious impact on the price increase in China.

At present, China still has overcapacity in many sectors. The rapid growth of China's net exports is largely due to this overcapacity. An important question is: Will China's inflation get worse when there is excess production capacity? This is really a difficult problem. But to be sure, overcapacity is not a sufficient condition for inflation. For example, the overproduction of TV sets cannot restrain the rise of food prices. What's more, China is an open economy and faces a big international market. For example, the overproduction of steel is only for the domestic market, and the demand for steel in the international market is still strong, and the price of steel will not fall due to insufficient domestic demand. In addition, cost-driven inflation will not be suppressed by overproduction. The "stagflation" in the 198s was the coexistence of overproduction and inflation. In a word, we have every reason to worry about the prospect of inflation in China. On November 27th, the Political Bureau of the Central Committee's decision to "take preventing the rapid economic growth from becoming overheated and preventing the structural price increase from becoming obvious inflation as the primary task of macroeconomic regulation and control" is completely correct.

3. what is the tolerance of inflation to achieve relative price adjustment?

At present, there are still many price distortions in China. Adjusting these price distortions was not a problem two years ago, but now it is a problem because we already have inflation. Even so, we should continue to adjust the price, because we don't want to see Hong Kong container trucks continue to refuel in Shenzhen, farmers continue to suffer from "cheap grain hurts farmers", and enterprises continue to waste non-renewable resources and pollute the environment with impunity. Relative price adjustment should not be delayed, and time waits for no one.

However, due to the rigidity of price downward adjustment, the adjustment of relative price will inevitably lead to the rise of price level. In this case, we must consider what inflation rate China can tolerate. In the past, the reference target of the central bank was 3%, but now some economists think the tolerance is 6%, while others think it is higher. The tolerance of inflation is not a purely theoretical issue. According to China's experience, I think 6% is not desirable, and 4% is already the limit. The inflation rate should be kept below 4%.

if the inflation rate is too high, the adjustment of relative prices will become meaningless. In the inflationary environment, the increase of one price will inevitably lead to the increase of another price, and all kinds of prices will compete to increase. Apart from worsening inflation, the adjustment of relative prices is simply impossible. Now, the annual inflation rate in China has exceeded 6.5% in a single month, which gives the central bank a very clear direction: we must adopt a tightening policy to bring down the inflation rate. On the other hand, the tolerance of inflation determines the depth and breadth of our adjustment of relative prices. I believe that no one wants to repeat the mistake of "price breaking" in the 198s.

4. Is there a serious bubble in China's capital market, and should we adopt a policy of non-intervention in the ups and downs of capital market prices?

There seems to be no need to argue further about the asset price bubble, and the conclusion should be clear. The question that should be discussed is whether the government has the right and obligation to intervene in the capital market, especially the stock market. Now many people think that the government should not intervene in asset prices. We can intervene in inflation, but we are only "concerned" about asset prices. I think the government should really avoid interfering in the capital market as much as possible and should not burst the bubble rashly. However, when necessary, in order to protect investors, especially small and medium-sized investors, the government should not tie its own hands and feet, and "take action when it is time." Looking at Hong Kong and the policies of governments in other regions and countries when the stock market fluctuated violently, we can easily find the answer. In the previous period, although there were many improvements in details, the general direction of the government's efforts to stabilize the stock market was correct. If there were no efforts at that time, there would be no more peaceful and calm mentality in the current stock market.

our original intention of developing the capital market, especially the stock market, is to improve the allocation of resources and corporate governance structure, not to create casinos, not to seek rent, and not to use stock trading as a means of property redistribution. If everyone devotes himself to stock trading and forgets the real economy, and if enterprises are keen to invest their funds in stocks instead of industries, the long-term prospect of China's economic growth is very worrying. The development of China's capital market in recent years shows that the system construction still has a long way to go.

5. Is the growth rate of fixed assets investment in China too fast?

At the end of p>25, the head of the then National Bureau of Statistics said that the investment rate in China was 48.6%. In recent years, the investment in fixed assets in China continues to be significantly higher than the growth rate of GDP, but the statistics of investment rate have decreased. What is the investment rate in China? I don't know, I think it should be at least 45%. Compared with Japan and other countries, this ratio is indeed very high. Now there is a view in academic circles that the investment efficiency in China is quite high. According to some scholars' calculations, China's capital-output ratio is less than 2. If this is the case, it seems that it can be concluded that the investment growth rate in China is not too high, and there is still room for further improvement in China's investment ratio. This view has some truth and is worth further discussion. But I personally have doubts about this view. China's investment efficiency is cyclical to a considerable extent. Experience tells us that when the economic growth rate is very fast, all the efficiency indicators will be improved. After the economic growth rate goes down, all the efficiency indicators will become very bad immediately. Therefore, we cannot simply draw a conclusion. What's more, China's investment statistics are hardly reliable. However, it is undeniable that the academic research on this issue is really insufficient and should continue to be studied.

China's economic growth is largely driven by investment. Investment-driven economic growth is very different from consumption-driven economic growth. It creates economic overheating at present, but it will create overproduction in the future. But as Professor Wang Tongsan of China Academy of Social Sciences pointed out, in the past few years, China has further passed.