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Fast Growth and Inflation Threaten to Overheat Chinese Economy

SHANGHAI — Wang Jianren, a 56-year-old retiree in this bustling city of 20 million, says that over the years China has benefited tremendously from rapid economic growth. But like so many people here, he complains that inflation is beginning to eat away at those gains.
“Prices have gone up a lot,” Mr. Wang said at a vegetable market Friday. “It’s a very bad thing to have prices go up and down. Unstable prices make people nervous and make society unstable. In this sense, our generation even has some nostalgia for Mao’s era.”

This is the predicament China finds itself in today: Fast growth has fired up the country’s economic engines, but it has also led to stubbornly high inflation, which threatens to overheat the economy and undermine the long-running boom that the country has experienced.

The latest evidence of this came Friday when China said its economy had grown 9.7 percent in the first quarter of this year, certainly the strongest performance among the world’s biggest economies. But the government also said that in March the consumer price index had risen 5.4 percent from the level of a year earlier, the sharpest increase in 32 months.


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