US Faces Inflationary Risks From China Factory Boom, NY Fed Says
- New York Fed economists highlight risks from China policy
- China is overseeing a surge in industrial investment
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China’s effort to boost manufacturing and shore up the economy amid a real estate slump could put “meaningful upward pressure” on US inflation and push back the start of monetary easing, according to new research by the Federal Reserve Bank of New York.
Credit flows to China’s factories have accelerated sharply over the past few years, as authorities seek to compensate for diminished lending to the property sector. That’s matched by a shift in rhetoric from Chinese leaders as they talk up industrial policy. The new approach stands a chance of boosting China’s economic growth above the rates of the past two years, at least in the short term, New York Fed economists wrote in a blog post this week.