White Hot China

That China’s economy has been growing, and has been doing so at a breakneck speed, is not news.  But that inflation is accelerating in China, well, that’s news.  Inflation picked up from 3.6% in September to 4.4% in October.  That’s a huge increase in monthly terms.  And in some areas, food prices have surged by as much as 2/3.  Inflation occurs when you have too much money chasing too few investment opportunities and goods within an given economy.  The central government is concerned to the point where subsidies are going to be offered to help people afford groceries.

This speaks volumes as to the fact that China has long has a trade surplus with the world to the point where it’s starting to harm their own economy.  There’s also indications that the economy in China may be overheating to the point where it’s assuming speculative characteristics similar to those found in the US in the years prior to the financial collapse.  I don’t know what’s going to happen in China, but I think that they may be in store for some kind of correction in the coming year.


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