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In China, inflation causes discontent

Chinese customers select food on sale at a supermarket in Huaibei, east China's Anhui province.

Kai Ryssdal: I had a couple of really great Sichuanese dinners while I was in Shanghai last week. But I'll tell you, prices just aren't what they used to be. It can be downright expensive now, even to eat in a place full of locals.

Rising food prices are just another sign of a Chinese economy gone wild. Inflation there's at a three-year high. Food, gas, rent, you name it, is more expensive than it's ever been. Certainly the Chinese people are worried about it, but so too is the government.

Our China correspondent Rob Schmitz reports.


Rob Schmitz: When government officials announced the new inflation numbers this week, they sweetened the bitter pill with some sugar. As Tsinghua Professor Patrick Chovanec remembers it, one official said, "Yes, we've got problems with inflation, but look at the bright spots: investment in property development is a third higher than last year."

Patrick Chovanec: I look at that and I worry. In my view, those are all part of the same story.

Chovanec says more property development has led to another kind of inflation: asset inflation. He says these record-high property prices are the reason local governments around China conspire with developers, bulldozing people's homes to make way for high rises. And that's why we've seen several violent protests and bombings throughout China in the past month.

Chovanec: Nine out of ten of them have to do with land and land development and land seizures, and that's because there's just so much money to be made. Now what's happening though, on top of that -- with the slowing economy and inflation on the rise -- people who were getting squeezed before are now feeling even more squeezed.

So if you didn't lose your property to greedy developers and corrupt local officials, you're bleeding money because the price of food keeps going up. That's the plight of the middle class these days in China.

The weather's not great, either. Dolly Dong stands in a downpour, waiting for her bus, thinking about how much she's spending on, oh, everything.

Dolly Dong: I don't think the government has actually done anything to solve this problem. Transportation costs are really high, and that makes the price of food higher. The government should work on that.

Problem is, they are working on it. But inflation keeps creeping up.

In Shanghai, I'm Rob Schmitz for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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