Wednesday, Aug 13, 2008
and inflation is going to peak at 5% my Ar*e
CNN: China's cost spike
As China makes big moves to break into the first world, U.S. companies that manufacture there face soaring costs in a region that used to be the home of cheap, outsourced production. Here's why prices have jumped - and how 4 small companies are being crunched.
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If the cost of Chinese made goods goes up we are all heading for a huge inflation increase.
Posted by mark @ 02:16 PM (323 views) Add Comment
3 Comments
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1. Whostolemyendowment said...
China has benefited from the west's outsourcing culture.....but is now going to kill their golden goose. There will be catastrophic disruption within Chinese manufacturings causing widespread internal unemployment. We in the west may face higher costs, but generally these will be on items which are not vital....unless you can't live without your latest plasma TV, MP3 player or cheap toaster.
I can only hope that enough of western manufacturing has survived to take up the slack....or there again, there is always eastern Europe, India, Mexico....etc. So China should think carefully before they make themselves too uncompetitive and expect us to just toe the line.....there is always another 'low cost geography', which may be closer to home than you thought.
2. alan said...
Anyone who thinks inflation will stay below 5% needs to trot along to the purchasing section of their company and ask them what they think, based on cost increases being claimed.
If they pass the HR departments ask them about pay rises too.
Most companies start their budgetting round in September and the results of the "1st cut" will not be encouraging.
3. stillthinking said...
Chinese goods becoming more expensive does not cause inflation in the UK. Inflation is when there is too much UK money floating around. Our inflationary problems are from excessive borrowing, our own excessive borrowing. Chinese goods becoming less cheap ( because they are way off the cost of making them here ) is to do with real cost increases in China, however, don't panic because inflation will peak and then go down, so hang on to your cash and buy what you want later.