China update

1:834: That's the ratio of jobs to jobs seekers in China's civil service.

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Tainted Chinese products are nothing new. 

Back in 2008 there was a gigantic tainted milk scandal that left multiple infants dead. In that case, companies were adding contaminants to their milk to artificially boost their nutritiousness. 

Now there's a new tainted milk scandal, that's left at least three infants dead. The difference? The milk was purposely poisoned by a rival dairy, and now a couple has been arrested. According to LA Times, the milk was poisoned with nitrate. At least two farms have been shut down. 

Each one of these stories only underlines that China is in a stage of development similar to the US right after the 1900, during a period of great growth, but before basic institutions like the FDA were set up. The recent 5-year plan from Beijing -- to grow a bit slower, and also smarter -- fits in nicely with stories like these.

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For example, housing prices continue to climb even though Beijing has long promised to curb the property market and to spend billions of dollars over the next few years on affordable housing.
The average apartment in central Shanghai now costs more than $500,000. Even in second-tier cities like Chengdu, in central China, the price of a typical home costs about 25 times the average annual income of residents.
Analysts say too much of the country’s growth continues to be tied to inflationary spending on real estate development and government investment in roads, railways and other multibillion-dollar infrastructure projects.
In the first quarter of 2011, fixed asset investment — a broad measure of building activity — jumped 25 percent from the period a year earlier, and real estate investment soared 37 percent, the government said on Friday.
Some of the inflationary factors, like global commodity and food prices, may be beyond Beijing’s ability to influence. Gasoline prices have also jumped sharply, in line with global oil prices. As the world’s largest car market, China’s demand for fuel is soaring, and gasoline prices are close to $4.50 a gallon, up from $3.82 a gallon in late 2009.
Rising food prices, meanwhile, are showing up in various ways — including higher prices at fast-food chains, like Master Kong, which in January raised the price of its popular instant noodles by about 10 percent.
China’s current supercharged boom began in early 2009, during the global financial crisis, when Beijing moved aggressively to increase growth with a $586 billion stimulus package and record lending by state-run banks.
The loose monetary policy, and big investments in local government projects, did revive economic growth. But even at the time there were already concerns about soaring property prices, undisciplined bank lending and the huge debts being amassed by local governments.
The fear among some experts is that the bubble will eventually burst, leading to a wave of nonperforming loans at the big state-owned Chinese banks, which have been the main financiers of the nation’s phenomenal growth dating to the economic reforms in the 1980s.
Some economists have begun to argue that high inflation may be around for some time. Here again, the tug of war is evident.
To encourage the growth of a consumer market that will help meet the Chinese people’s demand to share the nation’s wealth, Beijing and many municipal governments have required employers to raise wages.
The government has raised minimum wages in the hope of reducing the big income gap between the rich and the poor, and the urban and rural. But higher wages drive up the costs of production, leading to higher prices. Some experts say rising wages may be an unavoidable inflationary force for years to come.
“China is moving into a new era, a new norm,” said Dong Tao, an economist at Credit Suisse in Hong Kong. “In the previous decade, inflation was about 1.8 percent a year; in the next decade, it may be closer to 5 percent.”

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