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- Excess money created by China’s stimulus and unfavorable global commodity prices are creating the most difficult conditions for inflation control in a decade.
- Limited economic rebalancing following the global economic crisis raises questions about the long-term sustainability of China’s growth path.
- Inflationary periods like the current one tend to be followed by 0.5 to 1.0 percent slower GDP growth, beginning three quarters after inflation becomes too high.
- Tighter credit and weak consumer confidence will cause continued but more moderate growth in coming quarters.