In a recent video by economist Ma Guangyuan, an intriguing title captured public attention: "I have heard the sound of an epic inflation approaching." This provocative statement ignited substantial discussions and raised concerns among viewers regarding the possibility that inflation could erode the value of their wealth. This scenario poses two critical questions: Is inflation indeed imminent, potentially at an epic scale? If so, how can individuals guard against it?

To address the potential for inflation, one must consider a crucial indicator known as the Consumer Price Index (CPI). This index serves as a metric for measuring the rate of price increases for consumer goods and services. A rising CPI indicates significant inflation, while a negative CPI would suggest deflation, or a decrease in prices.

Examining China’s CPI data since 2008 reveals a surprisingly fluctuating trend. In 2019, the CPI experienced a steady upward trajectory, reaching a high of 5.4% in February 2020—the highest level since 2012. At that time, many voiced fears of impending inflation. However, this spike was largely attributed to soaring pork prices, which subsequently drove up the prices of other meats, thereby influencing the overall CPI. As pork prices began to decline later in 2020, the CPI followed suit, even dipping to -0.5% in November—a clear indication of deflation, a troubling economic phenomenon generally frowned upon by economists.

Yet, it’s important to understand that even this negative figure need not provoke alarm. The decline was simply a reflection of the pig market collapse; CPI measures price changes against the same time frame from the previous year. For instance, if prices peaked around October 2019 and fell by November 2020, a drop below zero is a natural consequence rather than a sign of broad economic distress. The real concern lies not in this data alone, but rather in what it signifies about broader economic conditions.

While some may have felt reassured by these CPI figures, there indeed remains cause for concern, particularly regarding the dizzying rise in asset prices. Traditional CPI calculations focus largely on consumer goods such as food and clothing, overlooking the more pressing issue of real estate prices, which have far outstripped general inflation. Housing is often the most substantial investment for an average individual, and substantial increases in real estate prices can drastically diminish people’s perceptions of wealth, even when official CPI figures remain stable.

Globally, two core asset types typically dominate wealth accumulation: real estate and stocks. The United States leans more heavily on stocks, given that many citizens invest their retirement savings in the stock market. A collapse in this arena would leave many retirees in dire straits. In contrast, China primarily relies on real estate as the backbone of wealth accumulation. With the majority of Chinese households holding significant portions of their wealth in property, a collapse in housing prices could prove disastrous, potentially leaving homeowners with debilitating debts to banks.

The implications of rising real estate prices reach far beyond mere financial statistics; they compound societal issues such as economic inequality, social unrest, and decreased consumer spending power. Over time, this can prove detrimental to overall economic development.

As individuals search for practical methods to counteract inflation, history suggests that purchasing property remains a primary strategy. For many, the advice of family—particularly mothers-in-law—urges home ownership. Often, the most significant wealth increase stems from property value appreciation, as many have experienced only modest gains from other investments. The essence of inflation lies in the creation of money beyond available production, creating bubbles that can only be controlled if governing bodies maintain authority over local monetary policies.

However, during tougher economic times, policies often favor increased liquidity and borrowing, channeling extra money into the economy. Historically, access to loans has been disproportionately skewed, with real estate purchases offering a more accessible path for individuals looking to combat inflation. This year, motivated largely by the pandemic, central banks around the world have engaged in aggressive monetary policies. While Western countries may have been more reckless, China's central bank has exercised restraint, likely due to the nation's still-developing international monetary standing. Any excess within the domestic currency must remain carefully managed to prevent rampant inflation.

This year, China's stock market has outperformed the real estate market, with cities like Shenzhen witnessing surging property values that have eclipsed those of Beijing. All the while, A-share performance has been robust, particularly in the Growth Enterprise Market and Shenzhen Composite Index, registering increases of 65% and 38%, respectively—far exceeding real estate's growth rate.

In light of recent reforms, the A-share market appears poised for a transformation, potentially aligning more closely with either Hong Kong or U.S. stock markets. This indicates a future where the indices may reflect greater profitability than traditional real estate investments. As a result, it is pertinent for individuals to stay savvy regarding their investment strategies, assessing their options between stock purchases and real estate, to effectively bolster their financial positions in the face of possible inflation.