China's inflation at government warning level

This means that the prices in China are sky rocketing. The prices are currently rising at about 2.5-3% per month. At this rate, people will find it hard to even purchase clothes. This will cause a rise in interest rate for bank loans.

This affects You, Me And the World

How could the inflation in the world's fourth-largest economy not affect us? Firstly, since Singapore has a lot of trade relations with China and because of this inflation, the cost of living for manufacturers in China will increase too. As a chain effect of this, they will be forced to increase the price of goods they produce. Singapore exports a lot of these goods to its own country. Therefore, the price of the goods from China that are being sold here. The rich here will not really fell the pinch but the poor undoubtedly and to top it off there is a upcoming GST hike too. In midst of all this, Singaporeans really need to tighten their belt.

But however, not all of the effects caused by this inflation are bad. When the price of manufacturing goods in China increases, the difference between Singapore and China's competitiveness will narrow down. This because, lets say for example, it costs 5$ to make a product in China, in Singapore it costs 7$ to manufacture the same product. Due to the inflation, the cost of making the product in China will maybe increase to about 6$ and so on. As this continues, manufacturers in Singapore will get more business. As a result of this, more factories will be created, resulting a increase in the number of jobs. This in turn will obviously lower the unemployment rate which means the less Singaporeans will have no jobs.

However, this might not be true as a major change might happen in world economy and besides i am but merely a student. Therefore, what i say may not necessarily come true.