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.
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.