Saturday, January 1, 2011

Inflation in China will cause the collapse of the regime

(AsiaNews) - The inflation that is hitting China recently, the cause of many social protests, is different from any other to have ever occurred in the country: it continues to grow and can be simply explained by the greed of a minority of people, exploiting the cheap labour and authoritarianism of the regime to get rich.

Wei Jingsheng, pro-democracy activist and author of Democracy Wall, explains why the Chinese government is playing with fire at this critical stage of development: only democratic governments, he says, "can successfully manage an economic transformation similar to the one taking place in contemporary China”.

China's economy often has excessive inflation. But each inflation is not exactly the same. The inflation during the Mao Zedong era was due to the shortage of goods caused by the planned economy. Academics call it a shortage economy. After the economic reform of the 1980's, inflation is still emerging consistently. At present the recently rising currency inflation has such intensity that it has made many people puzzled: "Since China has been reformed to a market economy, why is it still short of commodities, and has this inflation?"

Some friends with knowledge of economics would say: "the capitalist countries engaging in a Keynesian economy will also have a little inflation from time to time." So let us take a look at this Keynesian inflation of the Western countries, to see how it is different from the currency inflation in China now. Then we will analyze how to adjust and control the current inflation, and also explain why only democratic politics could avoid a hyperinflation. (more)

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