Reflecting the tight labor market, wage income for urban households rose 13% year-on-year in the first half, and average monthly income for migrant workers rose 14.9%, according to data from China’s National Bureau of Statistics…… At current rates, China’s private-sector manufacturing wages will double from their 2011 levels by 2015, and triple by 2017, eroding competitiveness and denting the exports that have played a key part in China’s early growth.
via Labor Shortage May Help China Adjust to Slower Growth – WSJ.com.
Comment:~ It makes you question official inflation figures of just 2.2 percent when wage increases are significantly higher.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
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On the positive side demand for consumer goods should pick up. Isn’t that the mantra for world trade?
There is a trade-off here. China needs to raise wages to increase internal demand for consumer goods, but raising wages (and prices) will reduce external demand for Chinese manufactured goods. What further be-devils the trade-off is Chinese consumers have a high propensity to save, so increasing wages does not automatically lead to increased consumption.