On my current trip to China I noticed that inflation is running rampant here, in fact it’s a lot worse here then in the US. Wages, food prices, etc. are all going up.

For instance, a bag of cement which was selling for 12RMB (about $1.75) last year is now selling for 36RMB currently. (The earthquake in May caused prices to sky rocket) Worker wages have been increasing at a 10% clip yearly yet it’s seems barely enough.

The government has been trying to dampen inflationary pressures by regulating the cost of energy which seems futile. A taxi driver in Beijing told me the government is currently subsidizing them over 1000RMB/month in gas rebates to prevent fare increases to customers. However he thinks this will soon end after the Olympics when subsidies cease and fare increases become inevitable.

I’m living in the US why would this matter? If the cost of production starts going up dramatically in China, then all the cheap ‘Made in China’ goods we’re used to are inevitably going to increase in price.

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