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Chinese inflation hits a three-year high

Rob Schmitz Jun 14, 2011
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Chinese inflation hits a three-year high

Rob Schmitz Jun 14, 2011
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JEREMY HOBSON: New numbers out of Beijing this morning say inflation in China is at its highest level in three years. Consumer prices jumped 5.5 percent last month, compared with a year earlier.

Let’s bring in our China Bureau chief Rob Schmitz. He’s with us live from Shanghai. Rob, how are these rising prices being felt in China?

ROB SCHMITZ: Well, inflation tends to be the backdrop to a lot of unrest in China. In the past few days, we’ve seen protests by migrant workers in Guangdong province. And if there’s anyone in China who feels the pinch of inflation, it’s migrant workers. The little they make they send home, leaving almost nothing for themselves. So, a 5.5 percent rise in the price of food is a very big deal.

HOBSON: Well when I hear rising prices and protests, I can’t help but think of the Arab Spring. Is there worry in China that these protests could escalate?

SCHMITZ: Well, you know the government’s worried about it for the pure reason of self-preservation.

I spoke to Geoffrey Crothall today with the China Labor Bulletin, and he says we’ve seen other protests this year where inflation was a big factor.

GEOFFREY CROTHALL: They’re paid very low wages, they have to work very long hours, they face discrimination, when they see one of their numbers attacked and victimized, the — I guess — the natural response is to react against that.

And as we’ve seen in the past, inflation in China has the tendency to spur social instability. It was one of the factors that led to the Tiananmen Square protests in 1989. China doesn’t want a repeat of that, especially now, when it’s trying to focus on the delicate dance of slowing down its economy, but not slowing it down too much.

HOBSON: Marketplace’s Rob Schmitz in Shanghai, thanks Rob.

SCHMITZ: Thanks Jeremy.

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