Is China Unfairly Blamed for Global Inflation?

With inflation on the march around the globe, the links between prices of
goods in different countries are now getting lots of attention. Low-priced
products from China have been given some of the credit for low global inflation
in years past, but higher costs for labor and materials in China are also
getting some of the blame for the current rise in prices.

Imports constitute around 15% of U.S. GDP and around 13% of that comes from
China,” the authors write in an article in the latest issue of China & World
Economy, an English-language journal published by the Chinese Academy for
Social Sciences. On their back-of-the-envelope calculation, that means a 1
percentage point increase in China’s inflation rate should lead to an increase
in U.S. inflation of 0.02 to 0.03 percentage points.

“It is estimated that something like half of total imports would need to
come from China for a 1% Chinese price increase to translate into a very
moderate 0.1% price increase in Japanese and U.S. prices,” the authors write.
“For any noticeable effect on inflation, China would need to dominate
international trade on a large scale.”

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This Article Takes up for China in regards to China being blamed for large scale global inflation problems.

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Plant In China Under Scrutiny

CHANGZHOU, CHINA -- The maker of a blood thinner suspected in four U.S.
deaths and allergic reactions in 350 people said Tuesday that its investigation
was focusing more closely on whether something went awry during the processing
of ingredients in China.

Baxter Healthcare Corp. spokeswoman Erin Gardiner said testing had detected
irregularities in samples of the drug, heparin, that were processed in China
from raw material extracted in China. No such irregularities were detected in
heparin made from raw materials from China but processed at a supplier's plant
in Wisconsin

Baxter has said that a Chinese plant here, Changzhou SPL, was the source of
much of the active ingredient in its heparin. The U.S. Food and Drug
Administration said it never inspected the factory because the agency mixed up
the company with another one that has a similar name. Changzhou SPL apparently
wasn't examined by Chinese drug regulators either, because it isn't licensed as
a pharmaceutical manufacturer with the Chinese government.

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This is a very troubling article regarding the Chinese regulations regarding healthcare exports. Mistakes like these are unacceptable. China may not be ready to handle the responsibility of being a world super power.

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Weather Chills China's Economy

Jeffrey Schwartz, the CEO of McDonald's' (MCD) China operation, boarded a plane on the morning of Jan. 28 in Shanghai for what should have been a routine flight to Beijing. But with some of the worst winter weather in memory hammering the country's transportation network, there are no routine flights in China these days. Schwartz didn't arrive in the Chinese capital till that night. "That hour-and-45-minute journey took me 12 hours," he says. "It was the snow."

Millions of people throughout China are suffering far greater hardships. One of the worst snowstorms to hit China since the government began keeping records in 1950 has wreaked havoc throughout the country. At least two dozen people have died in accidents and 827,000 people have been displaced. Heavy snowfall has caused gridlock at train stations and airports, just two weeks before the Chinese New Year begins and hundreds of millions of Chinese return home for the holidays.

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The major snow storms are causing inflation and power shortages in China. The weather has created transportation problems for travelers, and has hindered the shipments of coal, which is required to fuel China's power plants. According to the Civil Affairs Ministry, the snowstorms have cost $3 billion in damages.

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