China is on FIRE

As though there was a need to further prove that China is a bubble... 

"Based on anecdotal evidence, the daily cost of living in Beijing is now running 20% higher than at this time last year, and for Shanghai it is even higher - about 25-30%. Electricity prices have risen by over 300% and gas prices by some 600% over the last two years in the Shanghai area, and local manufacturers complained to Simon that operating costs are now on par with those in Singapore...

..The political leadership in China seems to be focused on food inflation and have recently threatened to instigate price controls on everyday goods; however, I suspect that the source of inflation is to be found in the extremely lax monetary policy of recent years (see chart 6). According to one source, Chinese money supply (as measured by M2) has expanded by a whopping 54% over the past 2 years alone2. It now stands at $10.1 trillion against $8.6 trillion in the US. Meanwhile, China’s monetary base stands at $2.36 trillion versus $1.96 trillion in the US3. Given the fact that the Chinese economy is still only about one-third the size of the US economy, one wonders whether the Chinese leaders took their eyes off the ball and now face an almighty battle to get inflation under control again."


http://www.financialarmageddon.com/2010/12/ready-for-some-crowding-out.html