A sword to control prices (Chart)

 Monopolistic market behavior of these prices to form a demonstration effect, causing structural inflation.

Premier Wen Jiabao pointed out: 2009 is the most difficult year in 2010, is the most complex of the year. How about 2011? National Bureau of Statistics in November 2010 the CPI was 5.1, according to the Lunar New Year Price Momentum factor theory and reasoning, December and January 2011, February's CPI should be greater than 5.1. 2011 The main task of macroeconomic control in China has clearly placed in front of the Government, price control will be the main task in 2011.

control inflation there are three alternative methods, the first is to control demand. Requirements include both consumer demand and investment demand, consumer demand is not currently able to control, but also to encourage, because the central government's runs counter to economic growth is clearly undesirable; and investment demand has two sides, on the one hand it is an integral part of total demand, the price may move up, on the other hand, it can be quickly transformed into the total supply, stabilize prices, the formation of fundamental forces, blind control investment demand may not be able to not only anti-inflation and inflation may make matters worse.

second way to control prices is to increase supply. China's current inflation of the cost factor is obvious, mainly in the RMB appreciation, rising wages and raw materials, labor input prices rose three areas. Increases in the cost is very dangerous, it could lead to rising prices and labor result of double high unemployment, that is, people often scared of the However, the economic China's current situation is unlike the case of the early thirties the United States, China is facing a potential crisis is very important overcapacity, rising costs will not be formed not only the economic Moreover, the factors that rising costs will be formed to force the mechanism to force the enterprises technical innovation, management innovation and to absorb cost increases caused the profits drop, this is what our country has long wish for. Based on the above considerations, control of prices by increasing supply methods should be focused on helping enterprise technology innovation and management innovation, the increase in supply is not blind to use.



are many reasons for price increases, both the demand-pull factors, and cost-promoting factors. But, for whatever reason, are reflected in the market, management control needs to consider not only inflation, control costs, but also to the management efforts in the market. As we all know, the second half of last year's price increases began in the country, Monopolistic market behavior of these prices, the formation of the demonstration effect, causing structural inflation. Therefore, the anti-inflation will have to use the third method, that method of anti-price monopoly. The recent discovery of the price adjustment behavior of various industry associations, and further confirmed the above judgments. National Development and Reform Commission at this time the measures introduced anti-price monopoly is inevitable. Its implementation will achieve threefold: steady economic growth, the transformation of economic growth while maintaining price stability.

Wenzhou University Business School, Professor Hu Zhenhua