Home -> Law Blog Directory -> International Law Blogs -> China Law Blog

International Law

: China Law Blog

China Deflation: We Hardly Knew You.

By Dan Harris and Steve Dickinson

The Economist Free Exchange has a post, entitled, "Fondly Remembering a Deflationary China," (h/t to Experience Not Logic) on how China has moved from being a deflationary force to an inflationary one. At JPMorgan's recently completed China Conference in Beijing, one of the best speakers I saw was James Kynge, of China Shakes the World Fame, whose talk was on how China had moved from deflation to inflation and how that would impact the rest of the world. The funny thing about past Chinese deflation was how few people in the West appreciated it. Most complained about the Yuan being too high, and about China polluting the earth and subsidizing its factories by allowing ridiculously low wages and unsafe working conditions. The problem with those arguments was that it ignored the huge swath of poor and middle class who were benefitting greatly from reduced prices at their local Wal-Mart. Now that China deflation is history, it is being recalled with fondness. For an example of how this deflation to inflation shift will affect consumer electronics prices, check out this post over at Chris Carr's CalPolyMBA blog. Be careful what you wish for.

Full post as published by China Law Blog on May 05, 2008 (boomark / email).