Tuesday, March 16, 2010
While it's sometimes hard to believe any of the economic data coming from the Chinese government, the recent reports on consumer prices might be a little more suspect than other data given that complaints about inflation are rising sharply.
The Telegraph reports on the unease that the 2009 credit creation binge and rapid money supply growth are producing here in 2010 as consumers notice prices rising around them.
A record number of Chinese have complained that inflation is at an "unacceptable" level, as the Communist party warned that its very future depends on tackling rising prices.In developing economies like China, food prices have a much bigger weight in the inflation statistics than here in the West and, apparently, that's becoming a problem as was seen back in 2007-2008. What's surprising to hear today is that complaints are higher than they were back then. Recall that there were price controls and hoarding in a number of countries for such staples as rice and, now, price controls for pork in China are set to begin anew.
In its latest quarterly survey, the People's Bank of China (PBOC), the country's central bank, said that 51pc of respondents were unhappy about inflation, the highest proportion since the survey began in 1999.
In February, China's consumer prices rose by 2.7pc year-on-year, up from a 1.5pc rise in January. The government has set a 3pc target for inflation this year, but some analysts have said the true inflation rate is already far higher, after an enormous increase in money supply last year.
In February, Chinese broad money rose by 25.5pc, well ahead of the government's 17pc target for the year.
A year or so removed from the worst economic crisis since the Great Depression, it looks like China is going to blaze the trail into the uncharted territory that will likely dominate much of this decade - rising inflation due to money creation on a scale that the world has never seen.