From the perspective of the relationship between economic growth and the RMB exchange rate since the reform of foreign exchange, China’s GDP growth and the RMB exchange rate show a relatively obvious correlation (and have a leading position for 1 to 2 quarters). For example, from the second half of 2016 to the first half of 2017, China’s GDP growth picked up slightly, accompanied by the continuous appreciation of the RMB exchange rate in 2017. Since the COVID-19, with China’s economy recovering faster than the world in the second half of 2020, the RMB exchange rate has also appreciated all the way.

At the same time, the bilateral exchange rate of RMB against the US dollar is also affected by the US economic growth. From 2015 to 2019, due to the decline of China’s long-term potential growth rate, the gap between China’s and the United States’ economic growth rate gradually narrowed from 5 percentage points to about 3 percentage points, and the RMB exchange rate as a whole also maintained the trend of depreciation against the U.S. dollar. With the outbreak of the COVID-19, the GDP gap between China and the United States widened again. In 2020, China’s GDP increased by 2.2% year on year, while that of the United States decreased by 3.4% year on year. The gap widened to 5.6 percentage points, and the RMB exchange rate against the US dollar also continued to appreciate.

From 2021 to 2022, as the COVID-19 has greatly damaged the global supply chain, the international commodity prices have continued to rise. The mode of “global supply and local demand” in the United States and other major western countries has determined that under the stimulus of monetary policy, local demand has increased significantly, while global supply has been damaged, leading to rising inflation. However, China’s fundamental principle of “supply depends on the local market and demand depends on the global market” has led to a relatively low CPI dominated by domestic demand. Although the PPI with strong external influence has been rising all the way, it is not smooth to transmit inward, so the overall inflation is relatively moderate.

In addition, there are several uncertain factors: first, the Omikjon virus may have an unexpected impact on the economy, or the COVID-19 mutation is developing in a more adverse direction; Second, whether the shortage of labor market can be alleviated quickly, whether people’s willingness to participate in labor can be recovered as soon as possible, and how long will the spiral rise of labor price and inflation last; Third, whether the major inflation items such as house rent can gradually fall back.