http://www.reuters.com/article/2013/04/14/us-china-economy-idUSBRE93D0BX20130414
As the world's second-biggest economy, China has undergone unprecedented growth in the last decade. This quarter, expected growth has exceeded expectations and concerns about inflation have risen. China's population of 1.3 billion remains overwhelmingly poor, and inflation often makes basic necessities unaffordable. For the China's communist government, as far as economic concerns go, inflation has to be a top priority. Tighter monetary policy is set to slow the growth rate in the next quarter. It's scary to think that one of the fastest-growing economies in the world is continuing to gain momentum.
Recently China saturated their markets with a giant stimulus package in order to spur growth. I believe that this is where inflation is coming from. For china I believe the difficulty will be in deciphering between expansionary and contractionary policy. With unprecedented usually comes some side effects such as inflation. Inflation has the ability to crush economies and china is now faced with the daunting task of controlling this problem.
ReplyDeleteChina must think quickly in order to prevent inflation from happening. If they cannot stop it, the value of their money will decrease which will affect the overwhelming percentage of poor and middle-waged citizens. Also, it will affect their savings accounts and their will also be a sign of poor performance by equity markets.
ReplyDeleteChina's economy and our economy can be looked at very similarly as they are both so big. So, looking at theirs and comparing to ours could show some similarities as they both grow so rapidly and can be so huge.
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