Quote Originally Posted by touchring View Post
Unlike in the 1980s where Chinese wages are very low, the China today depends very much on internal consumption as it does for exports. How will abnormally high inflation impact on the service industry and the employment rate?
Here's a couple rough ideas on that. It's inevitable that China will develop a fully formed internal domestic markets. Some pundits say that's still decades away, I think it will be sooner, perhaps 5 to ten years.
Once China has an internal domestic market up and running, then you are spot on about inflation being damaging. But let's not forget China is a communist dictatorship that can resolve public unrest at the barrel of a gun. The employment numbers would go bad and service industries would suffer but politics would stay stable and the Chinese people would bear their suffering quietly.