Rising China labor costs could create new inflation headache for West

Rising China labor costs could create new inflation headache for West
China National News
Monday 24th January, 2011  
(Source: The Daily Star)

BEIJING: Call it the price of success. China is starting to pass on the rising cost of labor and other manufacturing inputs as it restructures its economy, creating a potential new inflation headache for Western countries already grappling with surging commodity prices.

The threat for now is no greater than a distant cloud in a clear blue sky.

Excess capacity and high unemployment in the United States and Europe mean that most companies will be unable to pass on higher costs from China and will have to accept lower profit margins instead.

But the evidence is clear. The U.S. Bureau of Labor Statistics reported earlier this month that its China import price index rose 0.9 percent in the fourth quarter after holding broadly steady for the previous 18 months.

The index had dropped 3.4 percent ... ...

Read the full story at The Daily Star