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Geng Xiao addresses concerns that inflation in China has led to a rise in food prices.
He puts the situation in a larger context by pointing out that China’s rapid economic development should indeed lead to relatively high inflation rates, on par with those of developing nations. To solve the current imbalances, he argues, China must allow its interest rates and the prices of its raw materials and energy to adjust to natural market levels. Doing so would increase demand, supply markets’ efficiency, and wage levels.
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Commentary
Behind the CPI Figures
August 20, 2007