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Next Chinese export: Inflation

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BEIJING, China – Rising production costs in China might soon put an end to low prices.
Higher wages and new environmental regulations, along with higher raw- materials prices, are pushing up the costs of manufacturing in China. That will lead to higher prices for the clothing, bicycles, toys, electronics and other products the nation exports, according to economists, manufacturers and others involved in the China trade.

Next Chinese export: Inflation

BEIJING, China – Rising production costs in China might soon put an end to low prices.
Higher wages and new environmental regulations, along with higher raw- materials prices, are pushing up the costs of manufacturing in China. That will lead to higher prices for the clothing, bicycles, toys, electronics and other products the nation exports, according to economists, manufacturers and others involved in the China trade.
 
Price pressures on Chinese goods are an unwelcome development for the chairman of the Federal Reserve, Ben Bernanke, the president of the European Central Bank, Jean-Claude Trichet, and other central bankers, who are sounding the alarm about inflation as they raise interest rates around the world. Seven central banks, including the ECB, raised borrowing costs last week, while at least four Fed officials said that they were concerned about inflation.
 
Prices on Asian goods are starting to accelerate, the U.S. Department of Labour reported last week. Costs of goods from countries in the Pacific Rim, including China, rose 0.2 percent in May, the first increase since August 2005. Overall, import prices jumped 1.6 percent, more than twice as much as expected.
 
Labour costs in China last year, at US$1.36 per hour, were 72 % higher than in 2001, according to the Economist Intelligence Unit. At least five Chinese provinces and municipalities, which generated 55 % of the nation’s exports last year, plan to raise minimum-wage standards this year. Those regions include Shanghai and the province of Guangdong, the heavily industrialized area around the Pearl River Delta.

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