Timing and scale key to good economic policies

The commodity price hikes in the United States and elsewhere should primarily be attributed to the energy crisis and COVID-19 pandemic, or the supply side, instead of the US' monetary policy, even if excessive liquidity is a fact.

If the US tightens its monetary policies, that will have more negative impacts on the rest of the world than its loose monetary policies, as it will drive up development costs and sap development impetus.

As such, China must be prepared to cope with the shocks caused by the US Federal Reserve's contraction of its balance sheet.

Chinese policymakers must be on alert to endogenous challenges to the economy, as the downward pressure and new uncertainties are continually increasing.

The increase in investment is slowing down in almost all key fixed-assets fields, such as the housing market, manufacturing industry and infrastructure construction. And consumption growth remains weak due to the limited increase in incomes. The increasingly bigger role consumption plays in boosting national economic growth is mainly due to the fall of investment.

That the scissors differential between the consumer price index and the producer price index became more evident after 2012 in the country deserves attention, as the CPI covers the consumer market, which is more developed in comparison with the monopoly sector that serves as the foundation for the PPI. Although the CPI growth is mild, the PPI fluctuations are severe. So the CPI only tells one side of the story, and it is the changes in the PPI that better reflect the challenges confronting the economy.

Also, despite the unemployment rate of the working population, aged 16 to 60, being less than 5 percent, the unemployment rate for those aged 16 to 24 is 15 percent, and it is 20 percent for the 20-24 age group. These figures should be considered when analyzing unemployment.

Every new market entity created 0.9 jobs in 2015 but only 0.5 jobs in 2020. So the contribution new market entities make to employment is becoming smaller. The country should continue to support the more than 90 million small businesses, which account for nearly 70 percent of market entities.

The reduction of debt last year has brought down the overall leverage ratio of the economy. But this "improvement" should be seen objectively as it reflects more the unwillingness of enterprises to invest, and their pessimism over the prospects of the economy.