Raising the prices

Inflation is hitting the country and much of the debate focuses on price-hikes. China moved from the last period of stiff inflation in the 1990s into a situation that might sometimes more or less resemble those in a market economy. But how to deal with rising prices is an art that still dates from the planned economy, as Shanghai Scrap points out.
Time for some re-education of the officials who have to discover that price-fixing is not done in the open, but like in the West in secretive and illegal meetings that will be prosecuted when discovered by the government.
Meanwhile, prices are really going up. This week I saw the price of my breakfast, mostly a set of baozi's, go up from 0.8 rmb per piece to 1.0 rmb: more than twenty percent.

Update: And the government is starting to investigate price-fixing cartels. As they should.

The power pendule between central and local government

China Law Blog points at a remarkable analysis at the China Leadership Monitor by Dr. Barry Naughton. Key argument, the central government is getting more cloud over local government by asserting more influence on real estate, the major source of income for governments in China:

Since the beginning of the 2006 round of macroeconomic contraction, central government officials have evinced a willingness to directly criticize and confront local government officials over economic issues. As we noted in the previous issue of CLM, the State Council openly rebuked the government of Inner Mongolia for failing to mplement macroeconomic policies at an early stage of the contractionary policies.

This assertiveness has continued throughout the policy changes in land regulation, with a persistent willingness to state that the targets of increased regulation and oversight are local government officials.

Of course, the fall of Shanghai's party secretary Chen Liangyu plays an important part in his argument.
In short: I do not buy his argument and would rather see a central government that has so many priorities on its political agenda, its success depends very much on a negotiated balance it can strike with local governments rather than sheer power play. Local governments will never allow the central government to get too much influence in real estate, since much of the power of the local governments depend on that income from real estate.