China’s Premier expects nation’s economic recovery despite inflation

China is anticipated to witness a significant rebound in economic growth in the second half of the year (H2) after approved stimulus policy measures take effect, according to China’s Premier. However, rising consumer inflation may cause obstacles to the country’s economic growth. China’s government is taking steps to maintain the overall prices within an acceptable range.

“China’s economic operation has been through an unusual journey since the start of this year,” said Premier Li Keqiang at a symposium recently. “Generally speaking, the economy is seeing a hard-fought recovery based on the implementation of a raft of economy-stabilising policies,” he added while also reiterating the need for more efforts to stabilise the economy.

The fiscal and monetary policies are expected to be eased to push the country’s growth, Chinese media reports said quoting experts. These policies could include vigorous infrastructure spending and more support for small and medium-sized businesses and manufacturers.

Price inflation for manufactured products in China rose in June at its slowest rate since March 2021. This was due to the government’s measures to reboot work and production cut due to the pandemic. Attempts were made for stabilising key industrial and supply chains and guaranteeing secure supplies and prices while allowing some space for additional stimulus policy measures to reinforce growth.

China’s consumer price index, which is the main gauge of inflation, increased 2.5 per cent year-on-year in June as compared to a 2.1 per cent jump in May, as per the National Bureau of Statistics, China.

Despite this, China’s overall price index appears stable when compared to the rising prices in other major economies. For example, inflation records for the past 40 years have been broken in the United States since the consumer price index soared by 8.6 per cent year-on-year for May 2022, according to the data from the US Labour Department.

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