中金缪延亮 | 打破负向螺旋：低通胀的破局之道

Core Viewpoint - Since 2023, China's prices have remained low, with a general decline in inflation across major categories, reflecting dual pressures of insufficient total demand and structural transformation in the economy [3][4][12]. Group 1: Characteristics of Low Inflation - The CPI growth rate has hovered around zero, with the core CPI growth rate consistently between 0-1%, and the GDP deflator index has been negative for eight consecutive quarters, surpassing the duration of the deflation period from 1998-1999 [4][12]. - The inflation pattern shows a significant "one up, seven down" trend among eight major categories, with only gold and jewelry prices rising, while other categories face downward pressure [4][14]. - The divergence between production and consumption is evident, with the actual GDP growth rate around 5% while the GDP deflator index has been negative, indicating a disconnect between economic growth and consumer perception [4][20]. Group 2: Factors Contributing to Low Inflation - The Producer Price Index (PPI) has experienced negative growth for 32 consecutive months since October 2022, indicating persistent demand insufficiency [5][29]. - The low inflation pressure has gradually spread from rents to durable goods and discretionary consumer goods, with rents declining significantly since 2019 [5][33]. - The financial and real estate cycles are in a downward trend, leading to credit tightening and a negative spiral affecting both private and government sectors, which suppresses overall consumption and investment willingness [6][44]. Group 3: Weak Income Expectations and Consumer Behavior - Weak income expectations have led to a "consumption downgrade," where consumers are spending less on discretionary items despite an increase in travel numbers post-pandemic [8][66]. - The adjustment in the real estate cycle has a significant impact on prices across various sectors, particularly durable goods and discretionary consumption [9][33]. - The decline in income expectations is influenced by multiple factors, including wage growth slowdown and increased competition in the job market, which further constrains consumer spending [8][52]. Group 4: Policy Recommendations to Address Low Inflation - To break the low inflation cycle, policies should focus on stabilizing the real estate market and improving income expectations simultaneously [10][74]. - Recommendations include repairing corporate balance sheets and enhancing residents' cash flow, which can help restore consumer and investment confidence [10][74]. - The government should consider measures such as direct funding support for businesses, enhancing social security systems, and optimizing transfer payments to improve residents' financial situations [10][74][78].