China’s premier Wen Jiabao, Jim O’Neill, Chairman of Goldman Sachs’ Asset Management, argued this, and an analyst at Royal Bank of Canada says inflation is under control, but our Shaun Rein begs to differ, in CNBC.
I asked my office landlord recently if rent would go up 10 percent when our contract ends at the end of this year. She laughed and told me 20-30 percent at least. Taxi prices will rise 20 percent in Shanghai and other cities soon. The Shanghai government has said taxi fares will be raised after the public discussion period in June. Fuel surcharges have also gone up in Shenzhen and Beijing.
Plus tax breaks implemented during the crisis are being rescinded. In other words, a perfect storm of rising wages, rents and commodities will force most companies to begin transferring prices to the end consumer. With brownouts set to hit 10 manufacturing oriented provinces this summer, pricing pressures will only continue.
In order to stave off potentially destabilizing inflation and a housing bubble, the government should leave tightening measures in place in the short-term. Until the U.S. dollar regains its strength or America ends its wars in the Middle East, causing commodity prices to drop, there is no way inflation is a short-term issue for China.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
- Inflation: China’s nightmare – Shaun Rein (chinaspeakersbureau.info)
- Inflation raises tensions – Shaun Rein (chinaherald.net)
- How to treat women, China’s super spenders? – Shaun Rein (chinaherald.net)
- China sends its inflation to the US – Shaun Rein (chinaherald.net)
- Tariff cut needed to boost luxury sales – Shaun Rein (chinaspeakersbureau.info)