Analysis of Global Power Market
Analysis of Macro Economy in China
Analysis of Exchange Rate and Inflation Rate (2/2)
➤ Historical inflation rate in China fluctuated and exhibited a general decline trend during 2013 to 2017, which was mainly due to the slow recovery
of global economies from a series of financial turbulences e.g. global financial crisis in 2008 and European debt crisis in 2012, low commodities
prices (e.g. crude oil and steel), unstable global financial market and gloomy international trade sentiments. Meanwhile, China is also facing an
economic transformation from investment driven to consumption driven, the slowdown of economy growth is observed which also affected
domestic inflation rate.
China is maintaining an independent monetary policy with certain compromises given to the freedom of capital flows and foreign exchange rate.
People's bank of China is setting the monetary policy with multiple targets considerations such as the maintenance of price stabilities, promoting
employment and economic growth, and achievement of balance of payment, etc.. For the consecutive 5 years since 2015, the government has set
the target of CPI annual increase to be around 3% in the government working reports.
➤ Going onwards, considering that the central bank of China is to adopt a moderate monetary policy to stimulate the economic growth and to further
open domestic market to foreign capitals, the inflation rate is expected to slightly grow to 3%.
Percentage Change of Average Consumer Prices, China, 2013-2023E
%
3.0
2.6
2.5
2.0
2.0
1.5
1.0
T
T
2.7
27
2.4
2.2
Percentage Change of Average Consumer Price
1.4
2.0
1.6
3.0
2.9
2.8
0.0
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E 2023E
Source: IMF, Frost & Sullivan
0.5
T
FROST &
SULLIVAN
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