Pearl River Delta Shoe Enterprises To Accelerate The Collapse Of PPI Soaring To Highlight The Overall Inflation Shadow

Yang Wenbin, a 9 year old Hunan Xiangtan man who runs a shoe factory in Dongguan, Guangdong, is considering making a major choice in his career: moving the factory to the development area of her old home.

"There's no way. Everything is going up here, and we can't afford to hire anyone. The factory can't make money."

Yang Wenbin said that since the beginning of this year, the upstream raw materials have been rising in price, and the old relationship has not been used for many years.

What is more fatal is the rise in manpower costs.

His shoe factory now has more than 100 workers, most of whom are recruited from the old home.

Workers' monthly wages rose from 800 yuan a few years ago to 1200 yuan, but they still refused to do so.

A few years ago, he was asked to arrange workers. Now he is not easy to find workers.

Like many factories in the PRD, there are always signs for recruitment at the gates of Guangzhou Zengcheng St. titanium Hardware Co., Ltd.

But the young man working in the factory said: "the factory simply can't recruit people and live very tired. After many people came, they would rather not pay their wages."

"The situation is quite different."

Yang Wenbin said.

Changsha - Zhuzhou - Xiangtan has just been granted the national comprehensive reform pilot area, and the development area of the old town has invested in attracting investment everywhere, which has made him see hope.

Rather than paying high rent and high wages on the Dongguan side, it is better to simply open factories to their homes, and build factories locally, with lower costs, and grow along with the Changsha Zhuzhou Xiangtan economic zone.

Yang Wenbin's experience is clearly not a case.

Information from the Asian Footwear Association shows that in the first three quarters of this year, there were about 1000 shoe factories and supporting enterprises in Guangdong, which were closed down by various factors or voluntarily closed down, or were sealed up by courts or moved elsewhere.

Li Peng, the Secretary General of the association, even said that 200-300 of the 1000 shoe makers in Dongguan failed.

He emphasized that this data was obtained by the association through several field surveys in Guangdong.

The wind changed.

PPI will accelerate its upsurge. "This situation may continue for a long time."

Yang Chengchang, chief economist of Shenyang Wanguo (stock market), told an interview with the newspaper that with the rising price and labor costs of upstream products, the pfer of some low-end manufacturing industries in the Pearl River Delta and Yangtze River Delta to the central and western regions and even the surrounding countries such as Vietnam will not be avoided.

According to the data released by the National Bureau of statistics, CPI rose 6.9% in November, the highest gain in 11 years.

For the common people, this also confirms their keenly feel about the food price that keeps rising.

But in the eyes of researchers, what is more worrying is the other data released on the 10 day: in November, PPI (industrial goods ex factory price) rose 4.6%, or 1.4 percentage points higher than last month, the highest level since September 2005.

Statistics show that the purchase price of raw materials, fuels and power increased by 6.3% during the month, the highest level in 14 months since October 2006.

The reason why PPI rise is worrying is that it is a leading indicator of CPI. Its sharp rise shows that the price pmission from upstream production to downstream consumption becomes very obvious.

There was a long-standing divergence between the increase in PPI and the increase in CPI, and the increase in CPI was significantly higher than that in PPI, and the gap was obvious.

In this round of price rise, people feel mainly the rise of food prices, other aspects of price increases are not obvious, especially as upstream industrial goods prices have been relatively mild.

This is also the reason why the price rise before the government and academics emphasized that it is a structural rise.

But in recent months, things have changed.

In September, CPI rose 6.2%, PPI rose 2.7%; in October, CPI rose 6.5%, PPI rose 3.2%; in November, CPI rose 6.9%, PPI rose 4.6%, the gap between them was further narrowed, and the linkage was further enhanced.

Fan Jianping, director of the Economic Forecasting Department of the state information center, said that the sharp rise in PPI in November was driven by the rise in crude oil prices.

After the rise in the price of refined oil, domestic crude oil export prices continue to rise under the impetus of international oil prices, and promote the price rise of other industrial products.

Data show that in November crude oil, coal mining and washing, ferrous metal smelting and calendering processing industry prices rose significantly, crude oil prices rose by 22.6% over the same period.

GF Securities (quote stock bar) analyst Wu Youhui believes that the sharp rise of PPI is related to the weak dollar policy.

This policy led to a sharp rise in the prices of upstream products, including oil, coal and steel.

Fan Jianping predicts that the PPI increase will further expand in December.

All inflation or hard to avoid many scholars and analysts have said that if PPI maintains this increase or further rises, structural inflation will become the danger of total inflation.

Yao Jingyuan, chief economist of the National Bureau of statistics, said 10 days that the CPI rose by around 4.7% this year, the highest annual gain since 1996.

"At present, inflation is actually a situation."

Shenyang Wanguo Securities Yang growth said, "with the increase in the prices of key products, we predict that next year's cost driven inflation will be more obvious, which is also different from this year's structural inflation."

Lu Zhongyuan, Minister of the Department of macroeconomic research of the State Council Development Research Center and Qi Jingmei, senior economist of the National Information Center, believe that if PPI continues to rise and superimpose the slow rise in production data in the circulation field, it will trigger a full rise in prices, rather than a mere structural inflation.

Some manufacturing enterprises that earn a small profit have been unable to cope.

A business owner in the Pearl River Delta told reporters: "if the price of raw materials increases and the cost of labor rises by 10%, at least 5000 enterprises in the PRD will go bankrupt."

Even high-tech companies are deeply concerned about cost pressures.

"The rise of production costs, especially the cost of manpower, has put us under a lot of pressure."

Mr. Gu, the boss of Taiwan, who runs a IC chip design and development business in Shenzhen science and Technology Park, told reporters that although employees' salaries increased by about 10% a year, they always complained that the increase in wages could not keep up with the increase in Shenzhen's housing prices.

The trend of oil prices is especially noteworthy for next year's price trend.

Cao Changqing, director of the price department of the national development and Reform Commission, said 13, this year, the electricity price will not be adjusted again, and whether the oil price is adjusted is still under study.

But analysts estimate that the rise in oil, electricity and water prices is only a matter of time.

Prior to November 1st, the benchmark price of refined oil has been raised by 500 yuan per ton, in order to improve the contradiction of oil price upside down.

Cao Changqing also said: "the price adjustment of China's refined oil can not keep up with the increase of international oil prices.

In the long run, to maintain market supply or to rationalize prices, producers and operators will be profitable. "

This also shows that if international oil prices remain high, domestic oil prices will also rise.

Once the oil price rises, PPI will inevitably face more upward pressure and will eventually pmit to the downstream areas.

Bi Jingquan, deputy director of the national development and Reform Commission, frankly stated at the National Price Bureau Symposium 9, the pressure on the general price level to rise next year is still greater. It is quite arduous to complete the task of preventing price rise from structural rise to obvious inflation.

However, some scholars believe that maintaining moderate inflation in China's economy is not necessarily a bad thing.

In Yang's growing view, maintaining 4%-6%'s moderate inflation is actually not terrible.

The last round of apparent inflation is still in the years of 1992 and 1993. After more than a decade, China's economy is no longer the same. From management to ordinary people, the understanding of price increases should also change.

But he stressed that at present, government regulation and control of credit and price control are mainly directed at demand based inflation, and at the moment is mainly cost inflation. There are still doubts about whether these control measures can achieve effective results.