A reasonable rebound in prices signals the revitalization of the economic body. Recently, positive changes have emerged in China's price operations: the Consumer Price Index (CPI) has steadily increased for four consecutive months, rising by 0.8% year-on-year in December 2025, hitting a 34-month high; the core CPI has maintained a year-on-year increase of 1.2% for three straight months, reaching its highest level in nearly 50 months; the Producer Price Index (PPI) fell by 1.9% year-on-year in December 2025, with the rate of decline narrowing by 1.7 percentage points from its low point earlier in the year, and it has risen month-on-month for three consecutive months.
Prices reflect the relationship between supply and demand. Currently, the overall price level remains low, but positive factors driving an improvement in the supply-demand balance are accelerating and strengthening. As policies to expand domestic demand and promote consumption are progressively implemented, the consumption structure continues to upgrade, with significant growth in sectors like culture, tourism, sports, and mid-to-high-end retail, driving up prices for related goods and services; rapidly developing business models such as interest-based consumption and live-streaming e-commerce not only create new consumption scenarios but also achieve better alignment between supply and demand through reverse customized production; by increasing the intensity and precision of subsidies, the trade-in policy not only releases pent-up demand but also promotes product upgrades towards premium and smart features, fostering positive interaction between supply and demand. This indicates that the endogenous dynamism of China's consumer market is gradually recovering, providing favorable conditions for a steady price rebound.
Only when prices operate within a reasonable range can residents' basic living costs remain stable while allowing enterprises to secure reasonable profit margins. This incentivizes businesses to expand investment and innovation, subsequently driving job creation and growth in household income, forming a virtuous cycle of "expanding demand—reasonable prices—improved expectations—strengthened investment." Promoting a reasonable price rebound can also pressure the supply side to shift from competing on "low prices" to competing on "quality and experience," guiding factors of production towards high-value-added sectors, optimizing resource allocation efficiency, and accelerating the coordinated upgrade of both the consumption and industrial structures.
When deploying economic tasks for 2026, the Central Economic Work Conference emphasized that promoting stable economic growth and a reasonable rebound in prices should be key considerations for monetary policy. Achieving a reasonable price rebound requires a coordinated policy approach. At the macro level, it is essential to maintain the continuity and stability of macroeconomic policies, implement more proactive fiscal policies and appropriately accommodative monetary policies, incorporate the goal of promoting reasonable price increases into the monetary policy framework, and utilize fiscal and financial tools effectively. Measures such as reserve requirement ratio cuts and interest rate reductions can lower overall financing costs for society, channeling more financial resources into the real economy and creating a suitable macro-environment for price recovery. On the structural policy front, efforts should focus on both "expanding demand and optimizing supply," deeply implementing special campaigns to boost consumption, formulating and executing plans to increase urban and rural residents' incomes, optimizing the "two new" policies, and steadily advancing the "two major" projects to achieve a more balanced match between supply and demand. In terms of improving and optimizing market mechanisms, it is crucial to deepen the development of a unified national market, intensify efforts to curb "involution-style" competition, fully leverage the market's mechanism for selecting the superior and eliminating the inferior, unclog channels for phasing out backward and inefficient capacity, and resolve structural contradictions where oversupply in some sectors coexists with a shortage of high-quality supply, allowing price signals to more accurately reflect market supply and demand.
It is important to clarify that promoting a reasonable price rebound does not equate to "flood-irrigation" stimulus. Instead, it aims to facilitate the smooth operation of the price mechanism, unclog the supply-demand cycle, and foster a positive interaction between economic growth and price recovery. During this process, ensuring the stable supply and pricing of energy, raw materials, and especially essential consumer goods is paramount to securing the foundation of people's livelihoods.
Overall, China's economic development trend of stability with progress is continuously consolidating, the advantages of its massive market are steadily being unleashed, and the precision and effectiveness of policy regulation are consistently improving. These factors provide the practical conditions and foundation for facilitating a reasonable rebound in prices.
Comments