For several amazing years now, China has experienced one of the world's fastest economic expansions in global history combined with an unprecedented period of low inflation - a situation that economic theory says, in a world with scarce resources - like energy and metal - cannot last long.

Forbes reports that inflation is starting to pick up - as wholesale prices increased 5.4% from a year ago, with coal prices rising over 8.7%, ferrous metals 9.4%, processed food 10%, and meat up 34%! In reponse, the Chinese Central Bank has decided to raise their low interest rates to cool the economy.

From the BBC:

The People's Bank of China (PBC) ordered an increase of 0.27% of a point in commercial banks' benchmark one-year deposit and lending rates.

The one-year benchmark deposit rate will move to 3.33% from 3.06%, while the one-year lending rate will rise to 6.84% from 6.57%.

... The rapid growth has pushed inflation to a 33-month high of 4.4% for the year to June.

... Others said the move was widely expected, but would not be enough to curb inflation.

If you're used to the US Federal Reserves habit of keeping rates in multiples of quarter percents or "25 basis points" and wondering what's with all those strange percentages then keep in mind that the Chinese keep their interest rates in multiples of 0.09 percent because, if
rounding the length of the year to 360 days, it makes calculating
interest payments easy on an abacus.

Bloomberg has a great article about on the subject, if you're interested.

Yes, I realize the stamp is Japanese, not Chinese - sorry.