Recent data indicates that the national economy achieved a favorable start in the first quarter, with multiple metrics showing accelerated circulation between supply and demand, contributing to a mild and reasonable rebound in price levels. The Producer Price Index (PPI) rose by 0.5% year-on-year in March, ending a 41-month streak of negative growth. The Consumer Price Index (CPI) increased by 0.9% year-on-year in the first quarter, marking the highest quarterly growth rate in nearly three years. The core CPI, which excludes food and energy, rose by 1.2% year-on-year, while the GDP deflator also showed positive changes during the same period. This moderate and reasonable price recovery supports continuous improvements in corporate operating revenues, fixed asset investments, and fiscal revenues. These favorable developments stem from the steady and positive macroeconomic performance, coordinated efforts across various policies, and enhanced alignment between supply and demand.
As the inaugural year of the 15th Five-Year Plan period, the launch of several major projects and initiatives has driven demand recovery and price improvements for related industrial goods. Ongoing optimization of market competition order, coupled with comprehensive efforts to curb "internal-competition-style" practices in key sectors and continuous capacity optimization adjustments, has yielded positive results. Prices in sectors such as ferrous metal smelting and processing, as well as photovoltaic equipment and component manufacturing, have seen varying degrees of increase. On the consumption front, policies promoting the replacement of old consumer goods have been refined, and their synergistic effects with other measures have been increasingly realized, leading to quality enhancements and price improvements for electronics, household appliances, and other products. The implementation of measures to cultivate and expand new growth areas in service consumption has increased the supply of high-quality services, effectively unlocking consumption potential in cultural, sports, health, and leisure sectors.
From the production side, new growth drivers continue to develop and strengthen. The accelerated implementation of the "Artificial Intelligence Plus" initiative has boosted demand for computing power and electricity, driving price increases in non-ferrous metal mining and processing, optical fiber manufacturing, external storage devices and components, and electronic specialty materials manufacturing. The accelerated transition toward green and low-carbon development has also contributed to price increases in related industries such as biomass fuel processing and comprehensive utilization of waste resources. Additionally, conflicts involving the U.S., Israel, and Iran have led to significant rises in international crude oil prices, which in turn pushed up prices or narrowed declines for related production materials in the petrochemical industry.
Despite the positive trend in prices during the first quarter, challenges remain in sustaining a moderate and reasonable price recovery. Domestically, the demand foundation for a reasonable price rebound needs further consolidation, and the imbalance between strong supply and weak demand requires further resolution. Internationally, amid heightened geopolitical uncertainties, there is a need to strengthen expectation management and coordinate responses to the impact of rising international oil prices.
Overall, China has made notable progress in promoting comprehensive green transformation in economic and social development. The accelerated construction of a new energy system has raised the share of non-fossil energy consumption to over 20%. With accumulated experience in mitigating adverse effects from external factors, ample policy tools, and enhanced policy consistency, China is well-positioned to confidently address shocks from external price fluctuations.
Looking ahead, expanding domestic demand, strengthening the domestic circulation, and building a robust domestic market will be crucial for sustaining a reasonable price recovery. Comprehensive measures across monetary, structural, expectation management, and livelihood security dimensions are needed to appropriately elevate the price operating center while guarding against adverse impacts from external factors. Promoting reasonable price recovery should remain a key consideration in monetary policy, with flexible and efficient use of tools such as reserve requirement ratio and interest rate cuts to maintain reasonably ample liquidity. Enhanced coordination between monetary and fiscal policies, along with intensified monitoring of key markets and fine-tuning of policies, will be essential.
On the demand side, efforts should focus on solidifying the foundation for moderate price recovery by implementing initiatives to boost consumption, enhancing residents’ consumption capacity and willingness, and optimizing policies related to new urbanization and rural revitalization to achieve better supply-demand balance. Timely monitoring of the varying impacts of mild price increases on upstream, midstream, and downstream enterprises—particularly addressing cost pressures on downstream small and medium-sized enterprises—is critical. Accelerating the formulation of regulations for a unified national market, standardizing local government economic promotion activities, and establishing long-term mechanisms to prevent irrational competition will help curb cutthroat pricing and create a favorable environment for price recovery and profit improvement.
Strengthening regulation across the entire chain of production, supply, storage, and sales of essential livelihood goods, scientifically assessing and proactively responding to external factors and their impacts, and maintaining close monitoring and stabilization of prices for key livelihood commodities and production materials will also be vital.
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