Several Chinese government departments, including the National Development and Reform Commission (NDRC), the National Bureau of Statistics (NBS), and the People’s Bank of China (PBOC), have recently emphasized that promoting a reasonable rebound in prices is key to stabilizing market expectations and boosting economic confidence.
Kang Yi, Director of the NBS, said that promoting a reasonable rebound in prices is beneficial both for increasing income for businesses and residents and for stabilizing market expectations. He emphasized the need to continue leveraging the integrated effects of macro policies, expand household consumption, regulate market competition behavior, actively resolve supply-demand contradictions, and promote a reasonable rebound in prices.
The NDRC said it will implement a series of regulatory, reform, and supervisory measures in a coordinated approach to promote a moderate rebound in prices. The PBOC emphasized that fostering stable economic growth and a reasonable price rebound will be a key consideration in monetary policy.
Core CPI Is Rebounding
In recent years, persistently low prices have been a major challenge for China’s economic operation.
Starting in Q4 of 2025, price indicators showed signs of improvement. From October, the CPI turned positive year-on-year and continued to rise, reaching 0.8% in December—the highest since March 2023. The core CPI, which excludes food and energy, maintained steady growth, with year-on-year increases above 1% for four consecutive months starting September 2025.
Kang Yi emphasized that the current low CPI reflects both shifts in domestic and international macroeconomic conditions and China’s stage of development, and while some traditional growth drivers are slowing, affecting prices in certain sectors, and external factors are adding pressure to domestic price adjustments, these influences are considered temporary.
In 2025, the CPI exhibited clear structural patterns, with declines in food and energy prices significantly affecting the overall index. Favorable climate conditions and ample pork production ensured sufficient supply of meat, eggs, vegetables, and other food items, causing food prices to fall 1.5% year-on-year and reducing the CPI by approximately 0.27 percentage points. For energy prices, falling international oil prices drove reductions in domestic energy costs, further contributing to the low CPI. In 2025, energy prices declined by 3.3%, lowering the CPI by about 0.25 percentage points.
In 2025, the core CPI, excluding food and energy, increased by 0.7% year-on-year, 0.2 percentage points higher than the previous year. In December, it rose 1.2%, staying above 1% for four consecutive months.
Kang noted that favorable conditions for a moderate rebound in the CPI are accumulating. On the demand side, the implementation of special measures to boost consumption—particularly policies such as coordinated fiscal and financial actions to stimulate domestic demand—is expected to gradually expand consumer spending, providing a foundation for stable price growth. From a policy perspective, industry self-discipline and production capacity management will continue to take effect. In 2026, regulation of key industry production capacities will be further strengthened, and product standards and quality will be enhanced, supporting a sustained price recovery.
“Combination Punch” of Policies
Price issues are not only tied to economic performance but also directly affect people’s livelihoods. Wang Changlin, Deputy Director of the NDRC, noted that persistently low prices potentially slow employment and income growth and disrupting the broader economic cycles, and therefore, promoting a reasonable rebound in prices is a key objective of macroeconomic regulation.
Moving forward, structural regulation will be reinforced, with coordinated supply- and demand-side measures and a “combination punch” of policies to support a reasonable rebound in prices, and proactive fiscal measures and moderately loose monetary policies will be implemented, with moderate price recovery treated as a key monetary policy objective, said Wang. “This strategy harnesses the combined effects of existing and incremental policies to create a positive interplay between economic growth and price stabilization.”
Regarding structural policies, Wang explained that efforts will focus on implementing special measures to boost consumption, advancing income growth plans for urban and rural residents, optimizing the large-scale equipment renewal and consumer goods trade-in policies, and promoting the major projects for national strategic project implementation and enhancement of key field security capabilities to better balance supply and demand.
Additional measures will target curbing “involution-style” competition, establishing national unified market regulations, standardizing the behavior of local governments and enterprises, strengthening market mechanisms that reward efficiency, and facilitating the exit of outdated or inefficient production capacity. The overarching goal is twofold: expand demand and reduce involution, he said.
Regarding reform policies, Wang stated that efforts will focus on further rationalizing price relationships, promoting efficient resource allocation, and ensuring safe and stable supply. Simultaneously, work will continue to secure the supply and stable pricing of essential livelihood goods by rigorously managing the full chain of production, supply, storage, and sales, ensuring adequate availability and price stability, and reinforcing the foundation for people’s livelihoods.
In July 2025, the NDRC and the State Administration for Market Regulation drafted the Amendment to the Price Law of the People’s Republic of China (for Public Consultation), and solicited public opinion.
This marks the first amendment to the Price Law in 27 years. The draft introduces several provisions targeting “anti-involution,” strengthens regulations against unfair pricing practices such as low-price dumping, price gouging, price collusion, and price discrimination, and adds digital economy regulatory clauses to address gaps related to algorithmic pricing and big data–driven price discrimination. The revised Price Law is designed to work in coordination with the Anti-Monopoly Law and the Anti-Unfair Competition Law, creating a more comprehensive market supervision framework.
Reasonable Price Rebound Becomes Important Consideration in Monetary Policy
At the 2025 Central Economic Work Conference, while outlining the economic plan for 2026, it was explicitly stated that promoting stable economic growth and a reasonable rebound in prices should be key considerations in monetary policy. Notably, “reasonable price rebound” was listed alongside “stable economic growth” as a central monetary policy objective for the first time, attracting widespread attention.
Zou Lan, spokesperson and vice governor of the PBOC, stated at a recent press conference that China’s macroeconomic policy coordination is continuously strengthening. “With the deepening of the national unified market, the growth of new economic drivers, and the full implementation of special measures to boost consumption, supply and demand are expected to better align, circulation in the real economy will become smoother, and market confidence will be further strengthened, exerting a positive influence on prices.”
Zou emphasized that the PBOC has been closely monitoring price trends. In recent years, it has maintained a supportive monetary policy stance, ensuring ample liquidity, with total financial volume growth consistently outpacing nominal GDP over an extended period, resulting in substantial cumulative expansion.
He stated that in the next phase, the PBOC will earnestly implement the directives of the Central Economic Work Conference, treat the promotion of stable economic growth and a reasonable price rebound as key considerations in monetary policy, continue to pursue an appropriately accommodative stance, and leverage the combined effects of existing and incremental policies to create a favorable monetary and financial environment for supporting a reasonable rebound in prices.
Ming Ming, Chief Economist at CITIC Securities, said that this year’s monetary policy is likely to place greater emphasis on the synergy between high-quality development and price stability, and this approach serves both as a proactive response to the current economic situation and as a foundation for China’s economic transformation and upgrading over the next five years.
The prioritization of “stable economic growth” and a “reasonable price rebound” in monetary policy operations is expected, with policies likely to further coordinate with ongoing “anti-involution” measures, said Ming.