Elite Chinese Politics and Political Economy

Dear Readers, I know I have not contributed much of substance lately, but here is a piece of my mind. Exactly 20 years ago, China's inflation rate was going through the roofs, surpassing the 20% mark in many cities. Yet, a group of young scholars who worked for a think tank set up by then Premier and Party Secretary Zhao Ziyang wrote article after article about "acceptable" inflation--the idea that 20% inflation was normal for a developing country like China (for full story, READ MY BOOK). It turns out that there was some support for what they said, but they mainly made the argument because their political patron, Zhao Ziyang, wanted them to say so.

Now, the leader of that young group of scholars, Li Yining, is at it again. As one can see from the passage below, Li now blames inflation in China on current account surpluses and world price shocks. He is clever to admit that high investment was also a cause. The underlying tone of his remarks though is that the central government should loosen monetary policies because the cause really was "structural" (ie having to do with exchange rates). To be sure, Li is quite consistent in his argument; he also blamed inflation in the 80s on the structural problem of having too many SOEs and price controls. Be that as it may, China fortunately never implemented his preferred policy of not imposing retrenchment policies--or it would have faced hyper-inflation. Li's thinking is once again gaining currency, and this time, he has the backing of some subset of the political elite and the real estate tycoons. I don't want to sound melodramatic, but one feels a certain level of relief that Wang Qishan is taking the Vice Premier position at such a moment.


http://news.sina.com.cn/c/2008-03-04/091915071287.shtml
主持人：中行预计2月份CPI涨幅将超过8%。之前报道中你说过，今年上半年我国物价将维持高位运行，请解释一下。

厉以宁：这次物价上涨跟十来年前不一样。90年代初期，物价上涨也很快，是投资规模过大在起作用，引起了信贷过多，需求过望，物价上涨。此时，中央采取双紧政策。财政、货币政策都是紧的，很快见效了。

这次也有投资规模过大的因素，但外汇储备占款过多引起人民币投放过多也是因素，单纯紧缩不能解决现状。另外，物价上涨还受物价上涨引起，比如国际石油价格上涨。现在油价很高，油价上涨，粮价，估价粮价也上涨，有人讲：石油价高，玉米就用作炼酒精。玉米紧缺，饲料价上涨，带动整个粮价上涨。紧缩只对投资规模过大起作用，对另外两种因素不起重要作用。

当前应对物价问题，增加供给是必要的，比如粮价上涨，猪肉价格上涨，就要增加供给。当初用政策调动农民积极性就可增产，现在还需要大规模投入。比如猪肉降价，就要大规模产业化养猪，改革赡养方式。这靠政策号召不能解决。

物价上涨今年上半年还在高位，下半年随着供给增加，宏观紧缩措施取得一定成效，物价可以平稳，先高后低是今年物价上涨的趋势。

主持人：物价上涨对我国的经济会产生什么影响？

　　厉以宁：物价上涨对民生产生影响，老百姓生活负担加重，工资上涨滞后于物价上涨。同时，物价上涨，很多企业生产成本增高，会感到不好经营，特别是农产品的上涨。物价上涨对劳动密集型行业不利，容易把经济导向资本密集型行业，技术密集型行业。企业害怕生产成本上涨，工资上涨，会多买机器少雇人，就会产生就业问题。十来年前的上涨，紧缩出现，物价就下来，这次紧缩后物价不一定下来，我们要连续采取措施，包括加工资措施等。

　　经济学家应该冷静分析，工资上涨是滞后的，低速的怎么办？应采取补贴办法，是市场经济国家在必要时也会采用的暂时手段。

　　主持人：去年有6次加息，中行预测最快3月下旬进行非对称型加息，这会有作用吗？

　　厉以宁：加息只对由需求过多引起的情况有影响，可以降低投资。假如是外汇储备过多而引起的流动性偏大，加息也没有很大用处。不能寄予太大希望。而且调整存款准备金率、加息均属总量调控，是有局限性的，容易一刀切。所以结构性的货币政策调控作用更好。