Meanwhile: Inflation and the Shanghai Bus Explosion

Obviously, the earthquake in Sichuan has dominated news coverage and the blogosphere since it happened Monday. A couple of events shouldn't pass without being noted. Inflation hit 8.5 per cent last month, the government announced. This is bad and only going to get worse and is a very serious challenge for Beijing, as we've written before. We'll be running a commentary soon by a senior economist looking into the issue in detail and predicting that China will be forced to take major steps to head off worse, including a one-time revaluation of the renminbi in the double figures.

The other issue worth noting concerns the bus explosion in Shanghai on May 5th that left three people dead and a dozen injured. As my colleague Jodi Xu (who is from Shanghai) notes, it is now apparent this was a deliberate act of terror, an alarming thought:

The Shanghai bus explosion is now said to be set off by a middle aged man who brought a large bag of gasoline onto the vehicle. Many witnesses told the police afterwards that they saw the man get on the bus with a big burlap bag. He stood near the second seat behind the driver. But the mysterious passenger who brought the gasoline has disappeared. After a week's investigation and extensive interviews with the witnesses, the local police haven't changed their initial announcement that “the fire was probably caused by some inflammable material brought onto the bus.” No further explanation was given. But official publications report the police have been trying to track down the suspect by posting his image everywhere around the city --- a skinny, short 40-year-old.

Without being able to get trustworthy information from the government, speculation and fear are spreading in Shanghai. Rumors have spread in the city that Eastern Turkistan Islamic Movement (ETIM)--- the most wanted terrorist group in China's west --- is set to attack Shanghai's public areas in the coming months. There have been scores of text messages warning friends and family members not to go to crowded areas and avoid public transportation during rush hours. There's also discussion of the fact that another bus in Shanghai exploded in March, though no casualties were reported.

It doesn't help that while it keeps silent, the government is seen tightening transportation security. New regulations came into effect May 9th (four days after the explosion) banning liquids from Beijing's subways. I laughed when I first heard the news, which seemed absurdly difficult to enforce. But then it occurred to me that maybe this is how to really understand what's going on in the country. If the government is acting panicked, something is probably up.