All the talk was of China’s inexorable progress. No one could countenance the notion that China’s economy will suffer anything other than a minor hiccup in the year ahead. All bearish thoughts were dismissed.
Yet there was a fin de siècle air about the event. Perhaps it was former Labour government business secretary Lord Mandelson’s glad-handing that prompted the sentiment.
China’s economy is under strain as inflation threatens to spiral out of control.
Officially, consumer price inflation was up 5.1% in November year on year – a 28-month high. Goldman Sachs’s chief China economist says the country could see double-digit inflation unless Beijing takes more action soon. Many analysts believe consumer price inflation is already running at that level, given the rise in food prices.
Concerns are mounting over asset prices too. Real estate prices in November in 70 major cities were 7.7% higher than a year before. The problem is especially acute in the metropolitan areas. In Fuzhou the housing market is overvalued by 70%, in Hangzhou nearly 67% and in Tianjin 54%, according to a recent survey by the Chinese Academy of Social Sciences, a government thinktank. In Beijing house prices are 22 times disposable income; in the US at the market peak in 2007 it was 6.4