China's Rising Prices Are a Sign of Trouble

By December 2015, China had endured four years of declining producer prices. Coal was down 38 percent on the year, and steel down 31 percent. That month, the Communist Party hit on a new plan for reversing this dynamic. They called it "supply-side reform," and it was widely perceived as an attempt to eliminate the surplus capacity at mines and mills that was depressing prices and making debt difficult to repay.

Almost immediately after these proposed reforms hit the press, prices started going up. From Dec. 15 through the end of October, coal prices surged 114 percent and steel rose by 47 percent, more than making up for the previous year's losses. The increase was so pronounced, in fact, that the country's top economic planner actually asked miners to cap prices next year.