China inflation threat underestimated
The era in which cheap Chinese exports helped to keep prices down is now behind us, according to the insurance giant's fund division.
Instead, "as inflation becomes more and more of a concern in advanced economies, China is going to be making things worse," said Brian Coulton, an emerging markets strategist at LGIM.
While many commentators suggest Chinese price rises are peaking, Mr Coulton believes that Beijing is not on top of inflation – expected to come in at 5.5pc for March – which threatens a more painful tightening process to rein in prices than many expect.
"This means rising risk to the country's macroeconomic stability and of growth falling from the current 10pc a year to 4pc or 5pc." Mr Coulton said.
If China's economic growth does halve as feared, it could have serious implications for the global recovery. LGIM's argument is that soaring food prices are not a temporary driver of inflation, but reflect underlying pressures from rising demand rather than one-off supply shocks.
More from the source: China inflation threat underestimated - Telegraph
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What would the Gov say on this? Probably that it's a good thing as it would make UK industry more competitive...
The era in which cheap Chinese exports helped to keep prices down is now behind us, according to the insurance giant's fund division.
Instead, "as inflation becomes more and more of a concern in advanced economies, China is going to be making things worse," said Brian Coulton, an emerging markets strategist at LGIM.
While many commentators suggest Chinese price rises are peaking, Mr Coulton believes that Beijing is not on top of inflation – expected to come in at 5.5pc for March – which threatens a more painful tightening process to rein in prices than many expect.
"This means rising risk to the country's macroeconomic stability and of growth falling from the current 10pc a year to 4pc or 5pc." Mr Coulton said.
If China's economic growth does halve as feared, it could have serious implications for the global recovery. LGIM's argument is that soaring food prices are not a temporary driver of inflation, but reflect underlying pressures from rising demand rather than one-off supply shocks.
More from the source: China inflation threat underestimated - Telegraph
------
What would the Gov say on this? Probably that it's a good thing as it would make UK industry more competitive...
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