The emergence of China as an economic superpower

To the whole world, the low–cost imports from China have helped keeping the inflation rates in check for many years. Without that, inflation and interest rates would have been significantly higher. According to the Bureau of Labor Statistics, U.S. import prices from China in July were 1.3% lower than a year ago, and have continued to fall in recent months. This number was backed by the inflation rates within China, which has an average of 1.2% this year.

However, can China’s low-inflation effect sustain? It seems rather questionable right now.

Zhou Xiaochuan, chairman of the People’s Bank of China, admitted that China was likely to face greater inflation pressure in the future. The biggest risk of inflation would generate from protectionism, because it was the era of globalization which contributed directly to maintain the low inflationary environment.

Inflation is bad for an ordinary person’s wellbeing, but not everyone cares about it.