SCIO briefing on China's economy Q1-Q3 2019
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E-mail China.org.cn, October 19, 2019
CNR:
Mr. Mao just mentioned that the pork price has been on the rise this year. China has stepped up efforts to guarantee pork supply. You said more time is needed to control the price. Will the price be steady in the next few months? And analysts have said there is an adjustment in the proportion of pork in the CPI when the National Bureau of Statistics was calculating it. Is that true? Thank you.
Mao Shengyong:
Both of your questions are about the CPI. The growth of pork price in September fell on a month-over-month basis, but grew year-on-year. In the next stage, with further implementation of various policies, the supply of pork will increase, and the current tense situation will ease. The pork price should be back to normal in a few months after adjustment.
Your second question is more professional. I would like to take this opportunity to give you some introductions about it. Over the years of development, the price survey system of NBS has grown relatively mature. The collection and compilation of the price index are in line with international standards and recognized by international counterparts. The method we use to calculate the price index is the Chain-type Laspeyres Formula, which is in line with international standards. So how to calculate CPI? We need to know how the price of goods and services are changing. However, we can only select representative ones to observe, which we call the "basket". As these representative ones may change over time, we need to select new goods or services to be included in the "basket" on a regular basis. We also need to identify the portion of the different parts in the "basket".
How often should we change the components of the "basket"? Every five years, we undertake this change, such as in a year ending in 0 or 5. This is also in line with international standards. For example, the current CPI is based in 2015. We need to choose the representative goods and services. And this is conducted in strict accordance with the information provided by households. Once the content and number of the goods and services are identified, we need to check the variation of them in the "basket". And every part has its own proportion. So, how to make sure this is right? For example, to know the CPI, we should know how much the purchase of pork took up in total expenditure. We calculate it with the real data of expenditure, and no one will change the number on purpose, but indeed, it will change from month to month.
Fluctuations in the price changes basically reflect the characteristics and trends of the change. The data we calculated is more like a complex index. It reflects the general performance of business entities and general situation of business activities in the whole society. Meanwhile, different groups or individuals, of course, may feel the differences more acutely. Though the pork price grew sharply, the proportion of total expenditure is only some 2%. Meanwhile, there are industrial products, food and other services, which are accounting for over 90% of the total, and registered rise or decline. We put all of these together to calculate. Therefore, in September, the consumer price went up by 3% year-on-year. Thank you.
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