Global Economics Paper No: 147 - Globalisation and Disinflation - Can Anyone Else ‘Do A China’?

We look at the links between globalisation and inflation, and argue that the ascent of China has contributed to lower global inflation in three ways: lower import prices, reduced wage growth and higher productivity. 

• China’s urbanisation process has been key to its ascent, and we believe it still has a long way to go. We forecast that another 250 million people will migrate to Chinese cities in the next decade. 
• The cyclical rise in Chinese wages and inflation is unlikely to persist. 
• The other BRICs and the ‘Next 11’ developing countries could add to the disinflationary forces of globalisation.

Governments should resist protectionist policies, and need to agree on further trade liberalisation, especially involving the WTO.

>> Global Economics Paper No: 147 - Globalisation and Disinflation - Can Anyone Else ‘Do A China’? October 5, 2006 [PDF, 537 KB]