hackingbear writes: The New York Times warned the possibility of an inflation, not from our skyrocketing government debt but skyrocketing cost of doing business in China. Coastal factories are raising salaries, local governments are hiking minimum wage standards and if China allows its currency, the renminbi, to appreciate against the U.S. dollar later this year, the cost of manufacturing in China will almost certainly rise. [The report missed the biggest cost factors in China — electric and water utility costs.] “For a long time, China has been the anchor of global disinflation,” said Dong Tao, an economist at Credit Suisse. “But this may be the beginning of the end of an era.” The shift was dramatized Sunday, when Foxconn, the maker of the iPhone and everything else, said that within three months it would double (rather than the rumored 20%) the salaries of many of its assembly line workers. And last week, the Japanese auto maker Honda said it had agreed to give about 1,900 workers at one of its plants in southern China raises of between 24 percent and 32 percent in the hopes of ending a two week-long strike, according to people briefed on the agreement. [However, while big and famous manufactures, like those in the US and Europe, may worry about their PR images and give in to labor demands, it is unclear thousands of smaller ones would follow. And given the millions of workers waiting for work from India to Vietnam, the only thing changed, if any, may be the Made in China label of your gadgets. ]
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