From Carnegie Endowment for International Peace website:
China’s longest-running economic boom since reforms began may finally be coming to an end”possibly a difficult one. As Americans focus on criticisms of Chinese commercial practices, China’s economy surges on. It grew an astounding 12 percent in the second quarter of this year. But as this surge has accelerated, inflation has begun to stalk the land. This spring and summer, food prices jumped dramatically, and China is now careening on the brink of dangerous overheating.
China’s economy today looks much as it did before the inflationary catastrophes of 1988-¬≠1989 and 1993-¬≠1996. And as in the past, China today faces more than inflation. If inflation gets out of control, draconian steps to suppress it could cause hardship and social unrest. The consequences would hurt not just growth but also China’s commercial and political relations with the United States. [Full Text]
Albert Keidel is a senior associate at the Carnegie Endowment.