The Paper:

In last year's government work report, the CPI was projected to increase by around 3%. However, the CPI rose by 0.9% in 2021. What factors slowed down the CPI increases of last year? Moreover, we noticed that the CPI is set to increase by 3% in this year's report. Will China continue to maintain a low growth this year? Will last year's "low base" impact achieving this year's expected goals? Thank you.

Xiang Dong:

Over the course of last year, the CPI rose moderately by 0.9% on average, creating a favorable environment for economic recovery and improvement of people's lives. Against the backdrop of sharply increasing international commodity prices and increasing global inflationary pressure, China's CPI has remained stable, mainly due to abundant market supply and a bumper harvest in agriculture. In particular, pork prices fall because the pig production has remained favorable. In addition, the CPC Central Committee and the State Council have strengthened market regulation, stepped up efforts to ensure the supply of energy and raw materials, and keep their prices stable, thus creating conditions for price stability.

At present, China's industrial and agricultural production situation is pretty good. The number of hogs and "breeding sows remains high. The supply of major industrial and agricultural products is guaranteed, all of which lays a foundation to keep CPI stable this year. On the other hand, energy prices on the international market have risen considerably in recent months, which puts upward pressure on domestic prices. Due to climate change and other factors, we can't rule out that some agricultural products like vegetables will rise for the current period on the Chinese market. In addition, consumer prices of last year were exerting a 0.9 percentage point of carryover effect on prices this year. In comparison, the carryover effect of prices in 2020 was only a minus 0.1 percentage point. It is predicted that a CPI increase rate year-on-year will expand in 2022. However, it will still rise mildly. The CPI is projected to rise by around 3% this year. We have taken complete account of various potential factors affecting prices and leaving some leeway. This is also in compliance with last year's projected target and will help stabilize market expectations.