China's inflation

In February of 2010, China's price index has risen roughly 2.7%. With its price index rising, its economy has also been on the rise, while the rest of the world's price index keeps plummeting. Because inflation is occurring quickly in China, economists have guessed that the Chinese government will need to put an end to the stimulus, and soon.

Inflation, the general rise in prices of goods and services, in China could be kept in check by higher interest rates. However, raising the cost of goods in China leads to less of a demand in certain products, which would lead to less competition globally. One thing the Chinese government has done to control inflation is attempt to raise the value of the Chinese yuan, which is equivalent to the U.S's dollar. By raising the value of its currency, China could help prevent inflation from growing larger and larger.