And an hour later you're hungry again
Business Week reports China's Exports: How Low Can Prices Go?:

Four years ago, China figured prominently in the disaster scenarios of some international economists. At the time, South Korea, Thailand, Indonesia, and Russia had all suffered severe currency crashes--and contagion was raging through South America. As a result, China's once-booming export machine sputtered to a near-halt, and its manufacturers were pleading with the government to do something. What would happen if China were to sharply devalue its currency to boost its competitiveness? The result, economists worried, would be another devastating round of devaluations around the world that would exacerbate the global financial crisis. Beijing thought long and hard. In the end, it decided to keep the yuan fixed at 8.28 to the U.S. dollar, to the great relief of the outside world.

These days, Beijing again is coming under pressure to do something about the yuan--still valued at 8.28. But now it faces an entirely different conundrum. Trading partners such as Japan and the U.S. are urging China to let its currency appreciate. Why? Because Chinese factories are flooding the world with cheap goods, everything from televisions and DVD players to bicycles and children's pajamas. At a time when most of the global economy is on its knees, Chinese exports have rocketed by 20% so far this year, while its economy is expanding by nearly 8%. In China itself, overproduction has helped push industrial prices down by 7% over the past five years and retail prices by 10%.

To most U.S. consumers, of course, this is a blessing. Made-in-China products have helped keep inflation at bay in the U.S. And China's rise as a manufacturing power has cemented its relationship with the rest of the world.

But a growing minority of economists and policymakers are arguing that a deflationary China poses a real threat to the world. "China's prices are becoming global prices," Morgan Stanley economist Stephen S. Roach wrote in a recent report. Already pricing power over the past decade has collapsed for many consumer-electronics firms, apparel makers, and others. And even though few American producers compete with Chinese goods, Chinese manufacturers are rapidly moving up the food chain into semiconductors, telecom equipment, and other sophisticated digital devices. If the Chinese start dominating these industries, some fear robust pricing will never return to these sectors.

Chinese prices are already causing imbalances in the developing world. Mexico is seeing the flight of whole industries to the mainland. New manufacturing investment has plunged in most of Southeast Asia. The Japanese are already exploring exporting autos from China. Meanwhile, an influx of cheap Chinese consumer items and foods is raising hackles from Japanese producers. Haruhiko Kuroda, Japan's vice-finance minister for international affairs, warned in mid-November that "China will be exporting price deflation to the other Asian countries" as it produces more sophisticated products.

Gee, what's the Red China magic?

China's export juggernaut will certainly mean plenty of disruption for the global economy. But don't look for quick solutions. China deflation won't go away until the flood of workers from farms to factories slows--a process that will take decades.

It won't stop until most of the world's population gets a wage that would make a Chinese peasant happy.