Inflationary pressures have been building in China for the last year, and they erupted into the open in July. Policymakers have responded strongly, and the issue has taken center stage. After recounting current events, this article examines the economic background and implications of the recent changes and then looks at some of the political implications. The emergence of inflation heightens the economic and political dilemmas facing China’s leaders in the run-up to the 17th Party Congress.

A meeting of the Chinese Communist Party Politburo at the end of August scheduled the convocation of the party Central Committee’s Seventh Plenum and proposed a date for the opening of the Party’s 17th National Congress later this fall. Preparations for Party congresses preoccupy the top Party leadership and inevitably heat up the political atmosphere in Beijing more than a year ahead of time. Judging by available indications, preparations for this congress have gone relatively smoothly. This article offers a number of inferences from the PRC media treatment of the upcoming congress about what themes the congress will address and about what changes in the leadership may emerge from the congress.

The issue that has dominated the trilateral U.S.-Taiwan-PRC agenda in recent months and that seems destined to do so for some time to come is the DPP referendum on joining the United Nations “in the name of ‘Taiwan.’” The issue of a “Second Republic” constitution, which was a matter of such great sensitivity in the first half of the year, has simply faded away with the passage of time and under the intense light of U.S. and Mainland attention. However, the UN referendum issue, already a matter of some controversy by early summer, came to occupy center stage not only in the election campaign, but also among all three actors in the triangular relationship.