Monday, January 31, 2011
Inflation in China
Prices are going up in China, which has caused retailers and manufacturers who rely on Chinese goods and supplies to delay or cancel shipments. This will have an effect on the United States' trade deficit, but will also make prices rise on these goods for U.S. consumers. Another side effect from the inflation is political. There has been pressure building for China to revalue its currency, but with inflation, the problem may be gradually curing itself.
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5 comments:
US manufacturers should start to explore the low-cost labor market in other countries. If US rely too much on China's manufacturers, they will have a chance to raise the minimum wage and cost of production, which leads to more trade deficits for US.
I agree, the US should look to places like India, who are also a growing economy, with low labor costs which fit the US needs. Investment in China is still a move in which the US companies should pursue with its rapid growth, but again I agree that exploring other low cost countries like India is a good plan for the US.
I agreed. Chinese exports are geting more expensive. New growing market should be found to satisfy the US demand for cheap-labor products. Veitnam and India are good choice. But in order to catch up with China in terms of exports, India needs to put money on the basic construction, not the IT industry.
This is a good thing for China. Its important that the Yen begins to revalue itself, especially since it was looking like they have no intentions in begining to do so theirselves. This is the perfect opportunity for the next up and coming developing nation to begin to produce and export goods to countries like the US. Utilizing cheap labor in India, Pakistan, and other third world nations, I believe we will see a shift towards producing in these nations, and China will begin to produce more specialized items.
Investors are already moving into Thailand and Indonesia because already about sourcing to China is becoming much more expensive. Ill look for an article on this but I've been reading articles about this shift for years.
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