Reuters:

In the first half of this year, the effects of trade frictions between China and the United States have not been apparent, but from the analysis, in the second half of this year, the economy may face great pressure of downturn. How do you analyze the influence over the economy and prices? Thanks.

Mao Shengyong:

Thank you for your question. My brief introduction just now shows that the overall operation of major national economic indicators was smooth in the first half of this year. Is there any effect of trade friction? I think even if there are some, they would be limited. In the second half of this year, what would the impact be? We need to wait and see. However, on the whole, the friction provoked unilaterally by the United States will affect both countries' economies. Moreover, nowadays, the world economy is further integrated, and industrial chains operate globally. Many relevant countries will be affected. Therefore, the friction will impact global economic recovery and sustain growth in world trade as well.

As for influence on prices, so far, they've remained stable. The price of imported soybeans may rise to some extent, which may affect the prices of beans and other relevant products. Overall, first, the weight of soybeans and relevant products in CPI are rather small. Second, the downstream products of beans, mainly bean extraction, may push up prices of pork and eggs, and impact cooking oil. In the first half of this year, prices of pork and cooking oil were at a lower level in our country. The price of pork dropped by 12.5 percent over the same period last year, and cooking oil 1.0 percent. Even if prices rise, the impact appears limited. In light of the trend of consumer prices in the second half of this year, the current mild rise in prices will continue.

From the following perspectives, first, monetary policy is still moderate, which will help stabilize prices on the whole. Second, let's analyze the three major elements influencing CPI. Take food prices for example. A good grain harvest in our country lays the foundation for stable price operation. In terms of service prices, the periodical reforming task of medical service prices has been fulfilled in the first half of this year in some regions. In the second half of this year, the pressure of medical service price hikes will be reduced. In terms of industrial consumer goods, on one hand, the rate of increase in prices of upstream and midstream products in PPI was less than the previous year's figure, which reduces the conductivity pressure on the prices of downstream industrial consumer products. On the other hand, the supply of industrial consumer goods has outstripped the demand, and the pressure of price hikes is not great. Third, China is promoting high-level opening-up. This year, imports will rise considerably, which will help expand domestic demand. Based on an overall analysis of these elements, our consumer prices will be constant at the level of a mild increase. Thanks!

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