China’s cut price export machine misfires

How much longer will China’s export machine - built on selling low cost manufactured products to the rest of the world - continue to grow at double digit rates? In an important article in today’s Sunday Times, Michael Sheridan argues that

“The fabled “China price” of cheap consumer goods has kept global inflation low, undercut workers in every industrialised nation and brought millions of Chinese peasants into a raw capitalist economy. That phase of globalisation may now be coming to an end, economists say. The export machine that powered China’s spectacular growth is slowing as the cost of manufacturing in China and shipping goods to Britain goes up daily.”

Rampant wage inflation, the huge rise in global shipping costs and an appreciating currency - all of these are having an impact on China’s cost competitiveness. The OECD for example is forecasting that the annual growth of Chinese exports will halve in 2008 and 2009.

Here is the rest of the article

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Made in China - but not quite so cheaply…... [7 May 2012]
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Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond [22 Nov 2011]
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Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
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