What do garlic, the Federal Reserve and your job have in common?
Chinese leaders are complaining that the medicine the Federal Reserve is using to heal the U.S. job market is playing a major role in making food more expensive for Chinese consumers.
Many commodity prices are soaring, but one of the most colorful examples is Chinese produce. Garlic, ginger and cabbage prices are on the rise, with some Chinese entrepreneurs actually speculating in the garlic market, buying up supplies to sell as the price rises, Chinese officials told a small group of Chicago Tribune journalists.
"People complain if the price of cabbage doubles," said Zha Peixin, a high-ranking Chinese official on a visit to Chicago. "There is a feeling of the general public that the money they are holding is losing value."
Besides food, real estate has soared, Zha noted, making it impossible for many people to buy apartments in cities.
While not directly blaming the Federal Reserve's quantitative easing policy exclusively for the problems, Zha and his colleague, Qin Yaqing, said that as the Fed pours money into the system, it is causing food prices to soar. And he urged caution.
Although "I fully understand" the United States' need to deal with unemployment and debt after the financial crisis, Zha said, "We are living in a world where all countries are interlinked and interdependent."
Qin, a professor and member of the Foreign Policy Advisory Group in China, added, "Every country needs to feed its people."
The two visited Chicago following recent tensions among G-20 leaders about dealing with the globe's recovery, trade imbalances and currency issues.
The U.S. has been pushing China to let its currency, the yuan, appreciate so that China does not reap a competitive advantage by exporting its products at low prices. The United States' position is that China relies too heavily on exporting and doesn't do its part to buy enough from the U.S. and other countries.
Qin took exception with the position, emphasizing that General Motors has been selling more cars in China than in the U.S. He said China is interested in making investments in the U.S. but fears being made a political scapegoat.
