Export Prices Rose By &Nbsp; Inflation In China Was Exported To The World.

Foxconn

(Foxconn) since the massive wage increase after a series of workers' suicides, the continuous improvement of wages in mainland China has always been the focus of attention.

Last week, a new survey conducted by Standard Chartered Bank on customers in China showed that they expected to raise wages by 9% to 15% this year, which is smaller than what some reports have said. However, the Standard Chartered Bank reported that labor shortage is also widespread.

The report also says that wage increases are driven by policies, because the central government is more worried about inflation, but wants to raise the minimum wage.

But it also reflects the changing market situation at the moment when companies are hiring difficulties.

A survey by Standard Chartered Bank showed that 45% of companies found it harder to recruit workers this year, although they generally offered higher salaries than the minimum wage.

The salary paid by the companies surveyed is 1800 yuan to 2000 yuan (270-300 US dollars) per month, which is 30%-40% higher than the minimum wage.

The way to increase wages is to pfer production to inland rather than outside China, while increasing capital equipment to increase productivity.

This trend is emerging as more and more people realize that China's inflation is not a temporary inflation caused by factors such as agricultural failure.

This time a new Chinese price came up.

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Bank of America Merrill Lynch economists call it "the new normal of the new ten years".

In short, they say that in the next few years, with the steady increase in China's labor costs, China's Lewis Turning Point will increase to about 4% when China enters the "Lewis turning point".

"Lewis turning point" refers to the turning point of the rapid rise of wages in rural areas as the rural surplus labor force in developing countries is decreasing.

With the understanding of this issue, it will have different effects on investors.

Over the years, buying and selling Chinese companies that produce the same products has always been an investment theme.

With the huge manufacturing machinery based on cheap labor, China has actually dug up the industrial bases of the United States, Europe and other Asian countries, and the industry has been outsourced by the whole industry.

At the same time, the demand for Chinese factories led to a substantial increase in prices from everything from steel to coal to copper.

China's labor force is still relatively cheap, but it is no longer the global cost leader.

In view of the size of China, it will be difficult to find someone else to replace it.

This means that China, as the source of global market deflation and the productivity increase of many companies, is likely to end.

As China seeks to move up the value chain, one of the more striking investments in this shift is the manufacturers of machinery and robots.

Another thing that deserves further attention is that it will no longer face the same price competition from China.

This will enable more countries to compete with China.

Li Feng is in a lucky position. They get commission from all their trading businesses, so higher prices are often beneficial to them.

But for many other companies, profits will be compressed unless they can pass the price up to consumers.

From a broader perspective, China will now shift from the source of deflation.