China’s economy has been growing at a break-neck speed for the last several decades, and many economists have been warning that China’s economy has been growing too fast - and going out of control. But China has been dodging this fate it seems. But inflation seems to have finally caught up with China.

The inflation rate in China has been growing steadily over the last few years, and it hit a 11-year high this month. Food prices have risen a shocking 18% over the last year, and the overall inflation rate hit 7%. This is especially problematic for China, that has been tightly controlling the exchange rate with the dollar.

This news comes at an especially bad time for China. A looming US recession is already slowing it’s export demand - China’s main source of income. The dramatically increasing inflation means China’s central bank has to either increase interest rates, or let the yuan rise against the dollar. Both ways, this is bad news for export and manufacturing industries. China has built its economic engine on the strength of manufacturing and exports, and this is going to cause serious problems - especially if it appears that China’s communist government is unable to control the inflation and economy.

This is also bad news for the rest of the world. All these years, China has kept global inflation down with it’s cheap products - from iPods to shirts to automotive components. But it’s soon going to start exporting inflation to the rest of the world. Expect to see global inflation rise - Along with tomato and onion prices in the super market.

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