Inflation is not just a problem in the US.

The Financial Times reports that in India, inflation has reached a 13-month high of 6.7%, while inflation in China has hit a 12-year monthly high of 8.7% last month.

Hank Paulson, the US Treasury secretary, may receive what his hosts consider a nice gift when he arrives in Beijing early on Wednesday – a strengthening Chinese currency poised to reach a significant new high.

After years of arm twisting by Washington, where the currency has become a litmus test of Chinese responsiveness to US complaints on trade, Beijing expects Mr Paulson to acknowledge publicly the renminbi’s gain.

Read the full story here.

Aside from worries over inflation, the Chinese and Indian economies continue to power ahead, according to Dave Fuller, writing in The Daily Reckoning.

Despite China’s dependence on the ailing US, its economy continues to charge ahead. Recently, it was announced that China’s real GDP grew by a fantastic 11.2% in 2007. There is no doubt that China’s economy is booming and in 2007, its trade-surplus doubled when compared to a year earlier. Moreover, retail sales in China have been growing at 14% per annum for many years and in the past 12 months, total sales reached almost US$1 trillion. Interestingly, the number of US Dollar billionaires in China jumped almost 10-fold in the past year from 14 to 106 individuals. All of the above leads me to conclude that the Chinese consumer will be an extremely influential factor in the years ahead.

Elsewhere in the region, India’s economy is also growing rapidly with real GDP growth clocking in at roughly 9%. Its industrial production has slowed down somewhat in the recent past but production of capital goods continues to soar.