From Telegraph:
… It’s possible, in fact, that China’s exported deflation was the key reason why the world avoided a full-blown global recession after 2001. And it is unarguable that, since China emerged as a major exporter, Western borrowing costs have been lower, and growth much higher, than they would otherwise have been.
But for how much longer? China’s consumer price index leapt from 4.4 per cent in June to 5.6 per cent in July – a 10-year high, and up from only 3.3 per cent in March. While modest by global standards, China’s authorities worry this inflation will persist. And that’s got Western economists worried too.
“China has exported deflation in the past, but that’s now changing,” says Gerard Lyons, chief economist at Standard Chartered. “And as inflation becomes more of a concern around the world, the inflationary impact of China is becoming much more important.” [Full Text]