Money Matters - Simplified

China, as cheap goods producer, may change

Beijing -- China's role as the world's premier low-cost manufacturer is shifting as wages and other costs rise, experts said.

"For a long time, China has been the anchor of global disinflation. But this may be the beginning of the end of an era," said Credit Suisse economist Dong Tao, The New York Times reported Monday.

Faced with rising criticism over a spate of worker suicides, one company, Foxconn Technology, makers of American brand smartphones and computers, said it would double salaries for many workers to improve their standard of living.

Also signifying a new trend, Japanese automaker Honda offered raises of up to 32 percent for 1,900 assembly line workers in China to settle a strike at four of its factories.
Chinese cities are also considering raises for workers as the fast-growth economy has caused real estate prices to escalate, especially in metropolitan areas. In addition, while the global recession crimped exports, China is increasingly reliant on its domestic market to keep production growing.
"Demography will do what the Strategic & Economic Dialogue hasn't," said Marshall Meyer, a specialist in China at the Wharton School of Business at the University of Pennsylvania, referring to international discussions between the United States and China.

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Copyright 2010 United Press International, Inc. (UPI).

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