“There’s no free lunch. All potential “solutions” to the Chinese inflation problem come with serious associated potential costs and risks. For example, raising interest rates could devastate the real estate industry and other sectors that have become addicted to cheap credit in China. Quantitative credit restrictions in a country that has relied on subsidized credit to fuel growth could cause certain areas of the economy to grind to a halt. For many Chinese industries that operate on razor-thin margins, yuan appreciation could cause thousands of companies and millions of jobs to disappear.” Read more.