Just A Little More Inflation Could Set Off Widespread Panic In China

Chinese inflation — including up to 20% food-price inflation in a month — is reaching levels that threaten social stability, according to RBS.

To get a sense of life in the Chinese asset bubble, check out this chart from Huang Zhen at Caixin.

It describes the monthly budget of a manager at a foreign firm in China, who has a salary of 480,000 yuan ($78,000). Each month leaves him with only 2,000 yuan in personal spending money. Further inflation would cause total panic:

If prices rose by 3 per cent, he would no longer sponsor poor students; if it rose by 5 per cent, he would have to cut extra curriculum courses for his child; if it rose by 8 per cent, he would have to reduce his pocket money and living expenses for his ageing parents; if it rose by 10 per cent, I am afraid we all would begin to panic.


Photo: Caixin

And remember, this is for a man earning $78,000-a-year. There are a billion Chinese who earn less than that and have already started to panic.

Don’t miss: 10 US States That Would Get Murdered In China Slows Its Imports >

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.