December 28th, 2010
02:07 AM GMT
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Beijing, China (CNN) – I am enjoying my new assignment in China but, boy, are things surprisingly expensive. Housing prices in the nation's capital seem to be almost as high as those in my last posting - Hong Kong. Food is costlier - especially vegetables, because of bad weather. Even clothing in the "world's factory" isn't cheap.

Fighting inflation: Prices here are expected to continue to rise in 2011. Chinese policymakers have made fighting inflation a top priority.  Economists expect a cocktail of tightening measures, including interest rate hikes, stricter lending practices, and price controls to keep inflation in at bay.

Decent growth: The moves will likely impact growth, too, but many analysts believe a slowdown could be mild. China is still healthy compared to many other economies and is expected to continue to drive the global recovery.

Rebalancing: One way is for China to continue to encourage consumer spending. That should be another theme in 2011. Expect to see higher wages and even a stronger Chinese currency. A more robust yuan should increase local purchasing power and address some of the concerns over inflation.

What themes do you see for China in 2011?

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Filed under: BusinessChina


soundoff (43 Responses)
  1. REY

    SMART CHINESE .

    December 28, 2010 at 4:02 am |
  2. Steven SooJung Lee

    I am glad to hear that China will have a growing pain. Current trend of China's economic development is very normal in capital system. I am waiting for this happens for long time, because moderate inflation will bring moderate wage hike. That means they will have more buying power for foreign goods. I think it's about time, isn't it.

    December 28, 2010 at 6:19 am |
  3. soon teh

    If I remember my history, wealth has always been highly regarded in Chinese culture. Indeed, Sima Qian dedicated one chapter in his epic Record of the Historian to some of the wealthiest personages of his time and that is from the First Dynasty through to the Han Dynasty.

    It was the wealth and luxuries of China that made it highly coveted and attractive to traders from as far as distant Europe through the Silk Route. The Chinese have a tradition of enjoyment of the finer things in life and every event is an opportunity to celebrate with good food and wine and merry making.

    The Chinese today aren't any different and given a chance, any self respecting Chinese will indulge. It is not hard to imagine that consumption in China will gradually inflate prices and encourage a wider range of luxury items let alone the normal and the mundane daily necessities.

    With those who are deeply concerned with image, no ostentation is too much and no price too high. One cannot equate indulgence with happiness and it is easy to forget that the best things in life are free when you are earning in a day what 100 of your fellow men earn in a year, right!

    The wise men of ancient Cathay practiced and led simple lives and set an example of how one can be totally free from the shackles and anxiety of chasing desires and dreams instead of living a simple and untroubled life.

    Can any Chinese escape the image of the ubiquitous carefree Taoist monk swirling away at his wine gourd on the back of an equally languid buffalo while the gentle breeze sway the dancing grass by the banks of a sleepy stream.

    Today's monk owns a Ferrari and even the devil wears Prada and we all chase the bull and try to evade the bear and we check our blood pressure and sugar level daily and proudly pop a myriad of prescription pills to prove that we live hectic and productive lives.

    But for now, at least, live and let live and enjoy life in any way that suits and enriches not only the self but also the soul. Meanwhile, prices will continue to rise and fortunes will continue to be made and the country will continue to prosper as it all should be.

    December 28, 2010 at 8:11 am |
  4. ismail tepedag

    China can not continue as it is. They are becoming rich day by day but acting as poorest people in the world. It means Yuan value is lower than real value and it means Chinese people can not buy more and it means they are missing a good life ! They invest their own gained money to USA and EUR. On the other hand they have such a lifelong job guarantee...
    Quality or Quantity ? It seem China considers quantity only.

    December 28, 2010 at 8:13 am |
  5. Denis Gao

    I believe China will strongly fight inflation in the year 2011,Mr Wen Jia Bao always concerned this.

    December 28, 2010 at 8:42 am |
  6. Ryan

    so hard to live in China now,rich man are richer and richer,poor man are poorer and poorer,housed,oil,foods's prices are growing all the time,who can help us?

    December 28, 2010 at 9:04 am |
  7. Matt Changsha

    Hiya,

    Here in Changsha the prices have also increased in the years i have been here, but its still ok, (for the average Chinese here, ofcourse not counting [rich] foreigners..)

    I beleave that China needs to rethink its education system however and i hope they will do this soon, the top level system seems fine, but average and lower average level needs hard work to improve.

    I do not think the social situation will become a problem, atleast in the parts of China i know.. The problem and focuss still should be how to make sure those who need it get a pay raise..

    I do think though that Foreigners are and will lose more of their... prefered Treatment on several fronts.

    The question what is corruption and what is business culture will stay an issue, both in regards to internal and external businesses.

    Anyway, looking forward to read more of your future reports.

    December 28, 2010 at 9:25 am |
  8. been there

    Hey Eunice, clothes is dirt cheap there, you just gotta BARGAIN! Just be bold and you can buy stuff sometimes five times cheaper than the initial price.
    Hope that helps, very best
    Andrew

    December 28, 2010 at 9:42 am |
  9. USAPANDA

    I lived in China for 10 years (until June 2010) and I can tell you it's not the rosy picture that the Chinese government likes to paint. They official CCTV news always has 3 messages:

    1) China grows stronger everyday.
    2) Your government is very busy.
    3) Outside of China is scary (or is dangerous).

    It's just a matter of time until China declines in both economy and general progress. Greed, corruption and the younger generation's over-consumption is and will continue to be their undoing.

    Don't get me wrong, I do love and respect many Chinese aspects of their culture, as well as having many close Chinese friends there but my over outlook for the next 20 years for China is not a positive one...especially as far as food, water, clothes and real estate goes (up, up and away). Elderly Chinese on a fixed income will probably suffer the most to start with.

    December 28, 2010 at 11:20 am |
  10. Boo Boon Khoo

    This is what sets China from other countries. This is a country that is truly run by government fiat. All policies are introduce and implemented swiftly, never missing on relevance and timeliness. You won't see this happening in liberal democracies. The biggest malaise of liberal democracies is formulation and implementation of much needed public policy is often held hostage by public policy debates are are essentially endless chatters and gallery shows. Just look at how the US and UK administrations respond to public policy demands and you'll know what I mean.

    Boo Boon, Manila

    December 28, 2010 at 12:58 pm |
  11. Yohanes Tjandra

    I share the same view with Eunice Yoon. China will grow slower but steadier in the year 2011. It will build a stronger economic base. That is the real capital system.

    December 28, 2010 at 2:00 pm |
  12. LJZ-ZSG

    Now in China, the price of goods is still high even though Chinese policymakers have made various policies to take the price into control. Due to local governments's little attention to policies made by central government, the majority of Chinese are aware that these policies are in vain. Wage hike and a reduced housing prices is really strongly required. I'm a Chinese freshman.

    December 28, 2010 at 2:04 pm |
  13. Manuel Vilhena

    Interesting issue. As far as i know China has been growing 10% for thirty years. Let's see what happens in 2011.

    December 28, 2010 at 8:10 pm |
  14. al leong

    at some point, if prices continue to rise, chinese will have to offshore to africa, and other developing nations in WTO to reduce costs, help other nations, but this mental shift will be very challenging. it may take 20-30 years. indians are already offshoring and building business in nigeria. chinese may not be capable and be stuck in a state of production for the next 10-20 years (FDI cannot flow out) until policy / government changes.

    December 28, 2010 at 8:49 pm |
  15. al leong

    if china continues at 6-9% gdp, then they would take on more FDI through EFTs and us investors. US would continue to grow at 1-2% and if currency is still pegged, and china continues to buy US bonds US will maintain a jobless recovery. a financial recovery would only cause rent-seeking in the US financial industry and it would end in a continuing financial tug of war between the US and China. China would continue to win jobs until prices (PPP) makes it unprofitable to ship products to the US. a big shift is green products/manufacturing/technology- if other countries buy us techs/servics, then the national trade balance would improve, if not, then the us would continue to be stuck in slow growth, albeit with the worlds largest economy.

    December 28, 2010 at 8:55 pm |
  16. RCAQ

    Too rapid an increase in real GDP is no safe solution. Now "just" keep the region (guess which countries I'm referring to here...) stable, bring in contracting measures, while at the same time raising interest rates (and finally get the RMB to correct levels by appreciating).

    December 28, 2010 at 10:02 pm |
  17. Michael Jordan ‖

    there is no doubt that our goverment has taken measures,but the end who knows.the public opinion is more opener than before,so we can talk something .Now China is more like a typical of the capitalist country than a communism.we have a huge gap between the rich and the poor.most gays don't have enough time to enjoy life but to work harder to fight the rasing of house pricess,oil,bla bla bla .

    December 29, 2010 at 1:52 am |
  18. JPNdefender

    CCP is afraid of the waves of protest of the people.

    December 29, 2010 at 3:48 am |
  19. bingo bush

    most young people cannont afford the hiking price of house in china.if a young man want to marry a girl,the girls will require a man having a house and a car at least.so that the poor young man hardiy marry.and the cities is not for the poor.they devote their life to make money not to buy a cheapest house in city.personally ,i am a young chinese from a poor family ,studying in a college.i donot dare to make a girlfriend,because i have no spend for girl .mmmmm

    December 29, 2010 at 11:41 am |
  20. juggernauty

    It is true that china grows stronger every day, and people's wages are growing too. But the they can't keep up with the prices increasing. It has been years that food price continue to increase, and it has such great effort on people's life, for example, the prices of pork, garlic and beans. The goverment need to do something to stop it instead of making speech about it. People need to keep there living.

    December 29, 2010 at 2:16 pm |
  21. ISAAC J SOWERSBY (EZACKAMO)

    You really the rest of the economies around the globe wouldn't be crisis might asia raise the value of their money to the right amount. Sure they got their reasons for slow value raise. Thats why it would be great might the value of money for labor be the same all over the world, ya know the world treasuries need to humble their selves so that the economies all over will take a giant step up and continue to climb. Forever Amen

    December 30, 2010 at 6:48 pm |
  22. Bob Page

    But pegging the RMB with foreign currencies, China has given up many tools of the trade in managing the economy. Furthermore, the lax management of banks and other financial institutions (even though they are all state owned), making many measures (e.g. reserves, loan quotas, etc.) are just ineffective. The difference in interests between the central government and the local governments making law and rule enforcement a no win situation. The conflict of interest between the government officials and the government makes any rule a joke.

    What I see in 2011 ? The failure of all macro measures.

    December 30, 2010 at 8:36 pm |
  23. Loser

    I think, the developing econmic of CHine is look like the Balloon, It will be blown up in the near future. Then alots of Chinese people will live in poverty. Governing could not control.

    December 31, 2010 at 4:38 am |
  24. Jing Hu

    The Chinese goverment has been saying this since November but nothing has changed.

    December 31, 2010 at 5:10 am |
  25. William Murray

    What concerns me most about China is the increasing disparity between the wealthy and the working class. In addition, those associated with government appear to have superior positions and look down on the masses. I read that most Chinese despise the unjust treatment they receive by their government and its support of the wealthy. That is not good for China over the long term.

    December 31, 2010 at 3:38 pm |
  26. Sam jiao

    Apparently,there are a lot of problems for current china:inflation,widening gap between rich and poor,envied by some developed conuntries.Actually,lnflation will cause bigger problem for poor than rich,even prosperous people can not bear price hike now.For widening gap,chinese goverment has made it at top priority,is about to rise people's wage,believe in that will be better in next few years.

    January 2, 2011 at 6:01 pm |
  27. leo

    with the lowest wage, highest daily cost in the world, you can imagine how hard the Chinese people are living. I am a Chinese, and I really want to know how is happenning.

    January 6, 2011 at 8:17 am |
  28. leo

    The people are so poor, but the government is still lending huge money to rescure some so- called countries in crisis. This is ridiculous! This is a typical central kindom mindset descended from the accient time, typical hypocritical to always say I care about the people, but actually care about only themselves.

    January 6, 2011 at 8:34 am |
  29. Leonard

    I think that China will only be able to really become an economic super power threatening to the power of the USA to place a bet, such as India, domestic consumption because China must seize the enormous amount of population that has the means of create wealth by avoiding closure of the huge industries that produce products below cost, and introduce them to the market to prevent an economic downturn, or the return of millions of Chinese to the field, but to have this issue the state must enable the Chinese minimum wage increase, but only up to a point, but starting this point (maximum salary-which should be replaced) the price of products would no longer be competitive with other emerging powers like South Africa, Mexico, Indonesia and even Philippines ...

    It is my opinion here ....

    January 8, 2011 at 11:16 pm |
  30. fuckallchinese

    Anyway, I think the United States, this time should unite in black or white cherish this time · · · national strength will unite, create new bright · and eternal super power.!!!!American hooray!

    January 9, 2011 at 9:46 am |
  31. fuckallchinese

    I have been to China where there was a xinjiang vassalages by colonial off · · · · · han very bad they are a inferior ethnic groups! · · · · should remove them much territory belong to our American · ·

    January 9, 2011 at 10:39 am |
  32. Henry

    Oh, apparently, many of you are expecting so much from the Chinese government. These policies, they sound soooo perfect, soooo hopeful that it seems all the problems can be solved once for all just by announcing these polices. But the real thing is, all the officials from the top to the bottom in China care nothing but meaningless growing numbers . Whether people in China are conducting a hard life or not is not their concern because they can live pretty damn good by taking bribes and exploiting those poor citizens, legally or illegally.

    As a normal Chinese citizen myself, who has no strong family background, I really feel hard to live a life in this "growing" economy-everything grows so fast except my poor salary.

    January 13, 2011 at 11:13 am |
  33. kenny

    i agree wiht you,bongl bush,i cant dare finding a girlfriend,

    January 15, 2011 at 6:45 am |
  34. seeking truth

    According to the documentary, Up The Yangtze, China beat common people that couldn't afford to bribe officials when they wanted them to move. Bribing is evidently very much a part of their culture (corrupt officials). That's not a good sign and something that needs to be watched very close if we choose to do business with them. That's wrong. And should not be encouraged.

    January 16, 2011 at 4:00 am |
  35. seeking truth

    I don't have a problem with china going well. i have a problem with bribes and corrupt officials that beat people or make their lives miserable.

    January 16, 2011 at 4:02 am |
  36. seeking truth

    China needs to get real. Lose the facade. Just be yourself.

    January 16, 2011 at 4:03 am |
  37. seeking truth

    Vegetables used to be free. Now they have to pay for them.

    January 16, 2011 at 4:36 am |
  38. zy

    I'm worrying about China if the currency of Yuan becomes higher and higher. There are 14 billion people in China related to so limited resources. The development of China even the people's lives depend on export. If Chinese Yuan keep higher, how can the people afford themselves?

    January 16, 2011 at 6:19 pm |
  39. zzz

    zy: me too. i'm worried about the whole world.

    January 17, 2011 at 1:04 am |
  40. olivia Ogunjimu

    I agreed with some of the above speak. The Chinesse Government shoul endavour to make its country condusive and pleasant for people to live.They should realised they to serving the people not their own interest.

    January 17, 2011 at 12:49 pm |
  41. olivia Ogunjimu

    The Chinesse Government should endavour to make its country condusive and pleasant for people to live.They should realised they to serving the people not their own interest.

    January 17, 2011 at 12:51 pm |
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