As it is, China’s official CPI is rising at close to 8 per cent per annum. The effect of China on the rest of Asia, moreover, is expansionary.
Coupled with fairly easy monetary policy settings in much of the region, which tends to occur in many emerging economies when US policy rates are very low because of the importance of exchange rate considerations to Asian policy-makers, this is likely to limit downside risks to growth in the short term. It does pose the risk, though, that inflation will continue to pick up.