金融英语阅读：Winners and losers in the inflation game
Editor's Notes:The Chinese character "胀 (zhàng)" has been chosen as a means of describing the Chinese economy in 2010 because of its multiple connotations: According to the Xinhua Dictionary, " 胀" means to expand and swell.
With a lending spree by banks this year, the excess money supply in circulation expanded, resulting in inflation. Swollen prices across a variety of sectors have caused economic hardship for the average wage earner and a palpable headache for government policymakers.
By Li Qiaoyi and Cong Mu
To harvest financial gains made at the end of the year is usually quite comforting for working class folk, who have toiled long and hard for a descent annual income. Yet this year working class people are both mad and frustrated that their annual bonus will not go as far as it did previously. In addition, the national mood has been dampened by the fact that more and more people find themselves unable to afford things they want and need.
Rising prices can be seen in every corner of people's lives, from cooking oil to instant noodles, from cotton pajamas to garlic - all have had a hand in breaking consumer piggy banks.
Inflation is nothing new, but few expected price levels to rise so fast this year.
The government set a goal to cap consumer inflation at 3 percent for the year and prices appeared to be under control in the first half. However, the consumer price index (CPI) surged above 3 percent year-on-year in June, and fears have grown as official figures continue to be higher-than-expected. In November, the consumer price index rose to a 28-month high, going up 5.1 percent year-on-year.
An explanation was needed to calm fears, and there has been no lack of inventiveness.
At first, pundits blamed the inflation on the summer floods, but as consumer prices rose higher and higher, more factors were balmed including seasonal fluctuations and market speculation.
In particular, food price hikes were said to be a major force driving up the general price levels, because food prices account for around a third of consumer price index calculations. But continuous non-food price increases stir more questions.
More and more people, voluntarily or involuntarily, have come to realize that the real cause behind this round of inflation is excess liquidity. Once touted as a bold effort to halt the financial tsunami of 2008, the 4 trillion yuan ($600 billion) stimulus package has become a debatable subject as it has had the sour side effect of jacking up prices.
Lending spree
In 2009, the year after the the global recession started, China's broad money supply grew at a whopping rate of 27.68 percent compared to a year earlier, and it continued to grow at a rate of 19.5 percent from January to November 2010.
The government finally decided to come to terms with fighting inflation in the second half of the year and put the brakes on the lending spree. In the fourth quarter of 2010, the People's Bank of China, the central bank, announced a 25-basis-point interest rate hike and raised the banking reserve requirement ratio three times to a record level of 18.5 percent.
At the annual Central Economic Work Conference held in Beijing from December 10 to 12, a gathering of the country's top policymakers put controlling consumer prices at the top of the economic policy agenda for the next year.
The loser
Inflation has put the average working-class citizen in a financial squeeze because salaries have already been kept relatively low over the past year, while the cash in their hands has bought them less and less.
The pinch on the pocketbooks of consumers is deemed by many to be unfair because they are in no way to blame for the problem, yet are powerless to do anything while they stand by and watch inflation devour their hard-earned money.
The real interest rate has been in the negative territory for 10 months now, which means that deposits in the banks are actually devaluating. Therefore, the average citizen does not want to plant cash there.
金融英语阅读：Winners and losers in the inflation game
For the up-and-coming middle class, buying an apartment in big cities was once considered an achievable dream to meet a personal desire for a place they can call their own, and hence feel some sort of economic security.But the social security network is largely incomplete in the country.
"Ordinary residents could only afford to buy an apartment if they work hard for 8.76 years while abstaining from eating and drinking," the Chinese Academy of Social Sciences said in a report in November.
Desperate, delirious or deluded, a large amount of retail investors turned to the volatile stock market to gamble with their financial future. In retrospect, the stock market had a roller-coaster ride this year, and individual investors largely fell prey to the institutional investors armed with bank loans, hot money from overseas and possibly insider information.
It is the same old story: The rich get richer and the poor the poorer.
The winners
While the working classes are powerless in the struggle to stay afloat in today's economy, those who have made a fortune off rising prices and inflation expectations are probably laughing all the way to the bank.
Online retailers are one of the winners from rising inflation.
Their growth has been spurred by the frugality of price-sensitive consumers who more and more frequently turn to online stores and group buying websites for bargains.
Lashou.com, China's equivalent of Chicago-based Groupon, was launched barely nine months ago.
The website said it raked in revenue of around 80 million yuan ($12 million) in November, and expects to generate annual revenue of nearly 1 billion yuan ($15 million) a year based on November's performance.
Banks are also making easy money thanks to the large amount of cheap credit made available by the stimulus plan. Total deposits in October this year were about 72 trillion yuan ($10.8 trillion).
In the first three quarters, listed banks' average profit growth was 44 percent from one year ago.
With the benchmark 1-year deposit interest rate kept at 2.25 percent for most of the year, cheap credit fueled the growth of those companies and individuals who could lay a hand on it, such as State-owned property developers.
Speculators - and not only those who play in the property market - but also those who twist the numbers in the garlic, sugar, mung bean and other agricultural product markets - all won at the cost of increasing the burden on working class folk.
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