China Economy and Inflation: The Strong and the Weird

China's economic growth continues to be strong--and weird. GDP grew by over 11 percent last year (more details here). We can't trust the statistics to have great precision, but we do know that China's growth was strong and greater than its non-inflationary growth rate.

We know the latter because inflation is rising seriously.

Now for the weird, courtesy of the Financial Times:

Under the new measures, retailers of food products such as milk, pork and eggs will need to seek permission from local price bureaux, institutions that have long ago ceased to have any effective controls over produce markets.

Economists who say the measures will not work point to an announcement last year freezing prices for government-controlled commodities such as oil and natural gas.

Only weeks after this announcement, the government was forced to allow an increase in petrol prices to defray fuel shortages caused by escalating global oil prices.

That was followed by this wonderful statement, which they have probably saved from Richard Nixon's visit:

“Our pricing law clearly states that the government wants to have a market-based pricing system.”

(Hat Tip to China Law Blog for the FT story.)

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