China can play key role in helping region through difficult times, analysts say

Compared with many other countries, China's success in curbing inflation can help the entire region, according to analysts.

Lili Yan Ing, lead adviser, Southeast Asia region at the Economic Research Institute for ASEAN and East Asia, said that while inflation in nearly all Asian countries is estimated to reach 4 to 5.5 percent this year, in China, it is considerably lower at 2.1 percent. In countries that are members of the Association of Southeast Asian Nations, or ASEAN, inflation stands about 5 percent.

Ing said China experienced high inflation in the early 1990s. "Since then, China has introduced reforms, including providing direct subsidies to help the poor, and ensuring the availability of food, particularly grains and vegetables," she said.

By providing vaccines and other medical supplies, China performed well in helping its neighbors fight COVID-19, Ing said. "So, if China can also help ensure food supplies in the region, I think that will help a lot in assisting those countries in need, and also in managing inflation in the region," he added.

Yip Sau Leung, associate professor of economics at Nanyang Technological University in Singapore, said if China can keep its inflation rate low, this will help bring down the average level of inflation elsewhere, simply because of the scale of the nation's exports to ASEAN members and other countries.

China can increase its productivity, he said, adding: "We raise our industrial productivity, we export more. We can export more because we are more competitive… because our food prices are not rising so much."

In New Zealand, Siah Hwee Ang, professor of international business and strategy and chair in business in Asia at Victoria University of Wellington, said the influx of foreign investment into property markets in Australia, New Zealand and parts of Asia contributes to inflation in those markets.

At the same time, however, China has a mechanism to restrict capital outflows, "which is extremely helpful". "It's good to have that mechanism in place," Ang said.

China also is a huge supplier and exporter of commodities to many parts of the world, Ang said. So if China wants to help other economies, it can encourage its domestic suppliers to set a price limit in their agreements with foreign companies, so that those companies cannot charge their customers excessive prices, Ang added.