China Seeks To Whip Inflation Now
China Challenges has a nice quote up from an FT article regarding the likely futility of China's governmental efforts to clamp down on inflation:
The raft of price control edicts issued over the past week by Beijing in an effort to rein in inflation has carried a whiff of old-style central planning and prompted scepticism over their likely effectiveness.“If [the controls] work they can only work in the short term, not in the long term,” says Ha Jiming, chief economist at China International Capital.
But such criticism may miss the point, according to Chinese officials who say the measures are primarily a signal of the government’s determination to stop inflation – which surged to an 11-year high of 6.9 per cent in November – getting out of hand.
Probably not a good thing that China's efforts instantly reminded me of Gerald Ford's oft-ridiculed "Whip Inflation Now" campaign.
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/2385
» China Economy and Inflation: Strong and Weird Businomics Blog
China's economic growth continues to be strong--and weird. GDP grew by over 11 percent last year (more details here). We can't trust the statistics to have great precision, but we do know that China's growth was strong and greater than []
Comments
I think the government rather hopes that the short term is all they will have to work in - they're still hoping for a supply response from the agricultural sector (especially those pigs) that would see inflation come tumbling back down within a couple of quarters.
Sadly most people think this is incredibly optimistic. In the meantime we get even more distorted signals being sent out to the market. And let's not forget that while price controls are a move back to the command economy, the rest of the country has moved on. Price caps on retail fuel have proven really effective - in reducing supply. This in a sector still nominally under state control. Who knows what the result would be if that happened for the agricultural sector as well. Meanwhile curbs on power and water prices are going to be doing wonders for those efficiency drives...
Posted by: Duncan | January 21, 2008 1:53 AM
Yeah, those yummy 1 yuan little sausages from the streets are all but disappeared in Shenzhen.
But the good news is there are McDonald's style chain restaurants selling Chinese street fares, like Noodle King.
Posted by: Charles Liu | January 25, 2008 12:33 PM