For all the warnings about Chinese food price inflation — in America and coming from Beijing — there’s little said about the many beneficiaries of inflation.
600 million rural peasants are loving it.
Peter Fuhrman of China First Capital writes in an editorial at Business China:
The increases this year in food prices have done more, in a shorter time, to lift income levels for many of China’s 600 million peasants than any other single measure taken over the last 30 years.
There has never been a better time, in China’s long agrarian history, to be a peasant. Fundamentally, food price inflation in China represents a colossal transfer of wealth from China’s more affluent urban areas to the rural hinterland where half of China’s population still lives.
City dwellers might hate it, but as long as they can tough it out this is good for China. Spreading the wealth to the countryside will reduce the overwhelming migration to cities, one factor driving the housing bubble. It will also begin the slow task of creating a middle class out of China’s biggest population sector.
This could be another reason central planning surprised investors this week by keeping rates low and raising inflation estimates.
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