Currently, China is facing severe inflation issue where the salary increment does not match with the inflation.
According to the Phillips curve, both inflation and unemployment issues will come to an economy at the same time. The concurrency between the inflation and unemployment makes an economic puzzle to the Chinese government as the root cause of inflation is unrecognized yet
Aforementioned, adjusting the interest rate or fiscal outlay is only able to solve either the inflation or unemployment once at a time. However, the reconditeness of root cause impairs the effectiveness of direct intervention.
Thus, to solve the inflation issue in China, the Chinese government should embark on both indirect governance and direct intervention. Strategies are discussed below