Thursday, September 20

China worried about inflation and freezes government prices

I was speaking with Andrew, an old classmate last weekend. He has a flourishing business out in China and UK and travels there frequently. One of the things he mentioned in passing was how food is getting expensive. As so it proved when i read this FT report.

China is to enforce a freeze on all government-controlled prices in a
sign of Beijing's alarm at rising public anger over inflation - now at its
highest rate for more than a decade.
The move will freeze a vast array of prices still under government control, ranging from oil, electricity and water to the cost of parking and entrance fees to public parks.
An order was issued jointly by six ministries yesterday, following a vaguely worded announcement by the State Council, or cabinet, in August on the need to
prevent price rises.
"Any unauthorised price rises are strictly forbidden . . . and in principle there will be no new price-raising measures this year," the ministries said.


All governments fear the poor natives. Once upon a time, the Romans used to establish games and give bread to keep the natives under control. These days, if you control the prices and give them entertainment, they will be happy as well. So China is exceedingly worried about inflation. This is mainly due to the rising price of grain and pork. Be worried, be very worried. I think the central bankers around the globe have been too successful in controlling and managing inflation. Also the downward pressure on prices from cost competitiion from countries like China and India have kept prices low. But given bad decisions, pig diseases, bad weather and the brilliant decisions by President Bush influencing the oil prices, inflation is rising across the globe.

And this will hit the poorest the hardest.

All this to be taken with a grain of piquant salt!!!

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