China and Inflation
There one economic fact that always holds true. When economically disadvantaged countries take on industry development because of low production costs, the economic growth of the population enables them to buy things they could never buy before. That local demand drives up local prices and results in local inflation. Simultaneously, demand increases the need for labor and then drives up labor costs.
Ultimately inflation and increased labor costs reduces the ability to be cost competitive.
China has been able to take on western production because of low labor and overhead costs.
We saw similar economic change iin Japan in the 60's, and else where over the years. Well the economic advantage China holds, is starting to dimminsh. Labor and the increased cost of oil is starting to drive inflation in China. So too will it's ability to continue to underprice production compared to other areas of the globe.
Re: China and Inflation
Capitalism is a very temporary celebration. When you look at the length of time of human history, a time of 50 years of boom is nothing. Capitalism will collapse very soon. We will be back to chopping wood and riding bicycles.
Originally Posted by RYou