China entering the world stage

A recent article in the Economist highlighted the growing importance of China for the world economy. In exporting cheap goods and demanding scarce natural resources and commodities, China has increased commodity prices worldwide and lowered product prices. So even though that the costs of gas, oil and metals are increasing, inflation remains stable worldwide. What has changed is the relative price of capital and labour, capital becoming more expensive. For decades the Americans have solely set the prices for commodities, exchange rates and relative prices but this is now slowly changing. Monetary policy and labour markets are increasingly influenced by China.