• Sun. Apr 21st, 2024

China’s Economic “Sugar High” May Fuel US Inflation

BySamantha Johnson

Mar 26, 2024
China’s Economic “Sugar High” May Fuel US Inflation

Chinese policymakers are currently taking steps to stimulate their manufacturing sector in an attempt to revitalize a struggling economy, which could potentially impact the US inflation outlook if successful. A report stated that such measures would lead to a significant rise in US inflation due to increased demand.

In recent years, China has experienced a shift in credit allocation within its economy, with a decrease in bank lending to the property sector and an increase in lending to manufacturing. A rise in “green loans” has also been observed as China’s clean energy sector grows. It is estimated that manufacturing lending in China made up a third of total lending in 2023.

If these investments prove successful and credit growth in China rises to 12% over the next two years from the current 9.5%, the US will likely see an increase in prices. This change would be driven by Chinese economic growth leading to higher production costs and ultimately resulting in increased consumer prices. This shift contrasts with the common belief that a manufacturing-led expansion in China would reduce inflation in the US.

Researchers noted that increased production in China could affect global commodity markets and the manufacturing supply chain, leading to higher inflation in the US. The significance of the Chinese economy in global manufacturing played a key role in this assessment.

By Samantha Johnson

As a content writer at newszkz.com, I delve into the realms of storytelling, blending words to paint vivid narratives that captivate and inform our readers. With a keen eye for detail and a passion for research, I craft compelling articles that resonate with our audience. My love for words drives me to explore diverse topics, ensuring that each piece I create not only educates but also entertains. Join me on this journey as we navigate the ever-evolving landscapes of news and knowledge together.

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