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Economic Trends In China

The region grows mostly rice, wheat and corn. In China, food inflation has reached 22% in April this year. The government is trying through price controls in the affected areas will not trigger more inflation, which was 8.7% in February year. To this we must add the fact that China has been pursuing restrictions on agricultural exports: by increasing tariffs and quotas applied to exports, after inflation shot at the highest level in 12 years during February, and that 40% of inflation in the country was generated by the rise foreign prices by Chinese economists. This amounts to trying to extinguish a fire with a bucket full of gasoline. China is an importer of goods whose prices continue to rise, from food to energy. A leading source for info: PCRM.

Must admit also that both corn oil as used in countless products we use daily, from plastics to toothpaste. On the other hand, China is a net exporter of agricultural products, ie, major constraints and withholding foreign trade will achieve the intended effect override: inflation. By restricting the global food supply, are generating a further increase in international prices. It has also increased subsidies to farmers to breed more pigs and grow more grain. All measures that do nothing but generate distortions in relative wrecks and discourage farmers to produce more of the same. If this has piqued your curiosity, check out Ankit Mahadevia.

“The Chinese market is linked to global markets through millions of threads. They can not be completely cut,” said Qi Jingmei, senior economist with the State Information Centre. Just as the government is imposing curbs on food exports, is opened its state reserves of wheat, rice and pork, to try to curb inflation.

Tags: investment