So what is the truth? Instead of always bashing the 'Western media', consider this.....
The real story is that the inflation is due to the printing of money that keeps China's currency artificially low, and that the rising currency is a side effect of doing what’s necessary to stop inflation — stopping (or merely slowing) the printing presses. The rub is that a slower rate of money growth will also cause a reduction in spending and a credit contraction, which in turn will cause financial and economic problems.
In other words, an economic bust is on the horizon. The increase in monetary spending, has been driven by wild credit growth, and has resulted in massive overinvestment in particular industries. There has been no shortage of commentaries and videos highlighting building booms, mania-type herd-mentality home buying and the mass creation of buildings, shopping malls and even multiple entire cities in China that stand unoccupied — all dramatic, yet classic symptoms of credit bubbles! And bubbles have this rotten habit of bursting!
Cheers!
An asset bubble has 2 components: massive overleveraging, and asset mispricing.
Overleveraging is taking on debt to buy something in the hope that selling it later, or working it, will make you money back to pay off that debt. In a market with the correct prices, this is fine, because whatever you reasonably want to buy will indeed make the money back, or you would've not bought it.
However, asset mispricing is the other part of the story. If the price is wrong (unreasonably high, for instance), many people will buy something that's essentially worthless. If people are not overleveraged (in debt), then that's OK for the economy as a whole, because if they lose, they'll lose slowly as individuals, and overall, would not lose much.
Combined, you have a disaster. At the start, there's a positive feedback loop as more buyers means higher profits, leading to higher prices, higher profits attracts more buyers and even higher prices, etc etc. In this highly unstable system, one tiny perturbation that reveals the true asset value would cause it to catastrophically collapse.
As prices decrease even a tiny bit, people start selling. As people sell, notable profits decrease, so the price decreases, people sell even more, prices decrease even further, until the asset is back at its true value. The problem, of course, is that DEBTS INCURRED DO NOT GO AWAY. So basically, the end result is whoever bought in, and the closer to the bubble top they bought into, the more they are enslaved by their creditors.
In China, property prices have increased 10% yoy. This corresponds to wage growth in China; otherwise, real property prices would've decreased relative to wages. That would be desireable socially, but having equal growth is a market phenomenon. Most Chinese buyers have huge down payments or straight up buy with cash.
Contrast to the US. Property prices were going up 30% per year in the late 90's and 2000's, but wages were DECLINING, yet home ownership was flying sky high. Why?! OVERLEVERAGING on a MISPRICED ASSET = BUBBLE.
The real bubble has not burst yet - the US Dollar bubble. The US printed 5 trillion dollars from nothing and expects the world to accept these 5 trillion dollars as equal to "real" 5 trillion dollars. The US itself maintains that fantasy, though the numbers are against them. US Treasury bonds are trading at high prices, with low interest rates, despite skyrocketing US debt and money printing. How is this justified? The only answer is: The US government is buying its own debt and financing it with "future assumed income". Of course by now, every additional dollar of debt makes the US economy weaker and smaller, so tax income is plunging downwards.
One tiny perturbation would pop the USD bubble and send demand skyrocketing downwards. AKA, the "value of the USD" will drop like a rock. What is that called?
HYPERINFLATION. Once that hits, the US will not be able to afford the 1 quadrillion dollars per barrel of oil that assets will become priced in, every other currency refuses to deal in USD, the US system of suburbs and just-in-time manufacturing grinds to a halt.
