Phoenix TV:

We noticed that the year-on-year increase of PPI in June dropped by 0.2 percentage points from May to 8.8%, but it remained running at a high level. What do you project for the next PPI trend? Do you think this decrease will continue and, on the basis of the recent comprehensive RRR cut, is there any need for further RRR cuts or even interest rate cuts in the future? Thank you.

Sun Guofeng:

Recently, China's PPI has risen rapidly. This is due to the low base factor of the negative growth of PPI caused by the impact of the epidemic in the same period last year, as well as the imported impact of rising international bulk commodity prices. This year's phased increase in PPI should be viewed objectively. On the one hand, this is a high reading based on last year's low base. In this regard, we can use the overall perspective of three consecutive years - last year, this year, and next year - to observe the changes in PPI. On the other hand, historically, the PPI indicator itself has relatively large fluctuations, so it is not uncommon to see peaks and troughs over a period of a few months. Generally speaking, the rise of China's PPI is temporary, and it may remain relatively high in the second and third quarters of this year. But, with the gradual decline of the base effect and the weakening of the imported impact brought about by the recovery of global supply, PPI is expected to decline in the fourth quarter of this year and into next year.

The recent RRR cut is a regular liquidity operation after the monetary policy returned to normal, and the stance of prudent monetary policy has not changed. Thank you.