Video

Topic of the video: Will the rise of China’s economy leads to world wide inflation?
Source:http://www.tudou.com/programs/view/2GZX3EWRv9k/

Summary:

This video is a discussion by an economist in China regarding his thinking on the world wide inflation that is affected by the rise of China’s economy. He indicates that China’s Consumer Price Index (CPI), a main measurement of inflation, rose to 7.1 percent in January, 2008 and he expects the figure in February, 2008 will not be slowed down due to the increase in product demand during the Chinese New Year. Prices of foodstuffs and energy rose substantially due to the strong demand and the record poor weather in China, with snow storms that covered a good portion of the country. On the other hand, raw materials, labor costs and land costs continue to rise together with the stronger currency. China’s growing economy has serious implications. It will push up price of exported goods. According to a major newspaper in England, the imported goods from China have already put pressure of inflation on England. Since China is also a major importer for the United States, price increases will be difficult to prevent in the USA. He expects the rise of China’s economy will impact world wide inflation.


My comments:

Before the post-1970s, when China’s economic reforms had not even started, a U.S. slowdown was usually enough to change the supply and demand balance in the natural resources markets and ease inflationary pressures. Commodity prices would be self-correcting. They would rise to the point that they slowed other major economies. They would then fall and the inflation pressures would evaporate. With the rise of China, this situation may change. China has stabilized the prices for energy, food and currency. It is creating economic pressure for the developed economies, such as the United States and England. With the rise of China, the demand for energy, foodstuffs and other commodities continue to rise. China has to satisfy the local demand before she can consider the export of goods. In order to balance the economy of China, the salary of workers has to increase to maintain the same living standard and price increase of export goods. This cannot be prevented. The rise of China will have an important impact on world wide inflation.