Inflation and Playing the French Card

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A fresh perspective, as ever, from Access Asia and a timely reminder of the puzzle of why France was singled out rather than Britain or the U.S. Anyway, it’s clear now that as expected a firm hold has been placed on protests by the government, as well as other nationalist activity, especially yesterday when protests in front of various Carrefours in China were fairly tame.

But inflation is still out there. We’ve heard the murmuring about hoarding in the last few days, too, particularly rice, and the concurrent worries it is already creating:

Thank Heavens for the French At least that’s what the Communist Party is saying these days. China is united in its dislike of the French – surely a sign that China is now fully part of globalized populist public opinion. All this focus on the perfidious French is very handy – nationalism as a way of directing disgruntlement where you’d prefer it to go – i.e. away from you. Just prior to the outburst of anti-Frenchism, the government was seriously worrying about growing disaffection and social disharmony around the issue of food inflation and supply. Some have suggested, and we agree, that we might be getting close to people starting to hoard food – something we haven’t seen since the price reforms just prior to Tiananmen Square in 1989. Then price rises and hoarding (usually by corrupt government officials) fed into the anger that erupted in June 89. TV, radio and the papers were, just prior to the anti-French campaign, all sternly announcing the official government line that everything was under control and the government would ensure food supplies of staples and enact measures to control prices – a sure sign that things weren’t under control at all, and that the Party feared problems ahead. While they could and would subsidize basic food costs, they naturally feared that, at that point, hoarding could start on both a small (i.e. housewives) and large scale (i.e. organized Party officials with access to warehouses, etc). Nervousness at the top is bound to trickle down and exacerbate public concerns that have been building since late last year.

Then along came the French to the rescue and the government has been able to switch focus and channel anger and discontent towards Carrefour and Louis Vuitton – inflation has of course not gone away, but has taken a back seat in public discourse. A win for Party Center without a doubt, and at little or no cost. But food price inflation hasn’t receded and will return and outlast any dislike of the French. We are in a critical period at the moment – one that could very easily escalate into the hoarding and worries of the late 1980s, which would be a serious dent in the Party’s social harmony agenda and one that can’t be so easily blamed on those currently useful French.

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