In a comprehensive report entitled "China broke Dominoes," SocGen analysts consider "three dominoes" export system of inflation in China and their current situation.
Domestic inflation.
China's transition from an economy based on consumption translates into an increase in domestic demand. The offer remains constant, so prices rise. This is already happening.
China exporting inflation.
"This dynamic seems as inevitable as gravity force," according to analysts Soc Gen. Demand for oil and steel prices in China has driven these markets. The same thing happens in the market of cotton and foodstuffs. These effects were transferred to developed markets such as the U.S., the shock wave will be felt in earnest in 2012. This process is ongoing.
Demand shock in China
Country's economic rebalancing long-term lead to a permanent increase in global demand. The offer is limited and will take up will come back, reducing the world's ability to meet this increased demand. This process has already begun! View the original document here.
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