Chinese Growth, But at what cost!

Chinese growth, but at what cost?

China is the world’s largest manufacturer as well as a major consumer of most of the world's natural resources, as a result, the well being of major economies are contingent on how successful the country is as a whole. Their perceived growth and consumption is critical to the world’s economic health. As it stands, China also produces the lion’s share of consumer goods such as TVs, electronics, clothing and other staple goods. They have existed as a cheap and reliable supplier to the west in most recent history. The Chinese economy is facing increased costs especially in manufacturing China; Land prices, regulation, taxes and labour are all recently inflated costs that may affect the price we pay for consumer goods from China.

Constantly increasing manufacturing costs seems to be as a result of Inflation in an effort to strengthen the Chinese economy and see GDP growth in the nation. This comes at the cost of American firms who have seen labour costs surge by 20% a year for the past 4 year. As a result, this creates a complicated situation whereby companies in the US do not want to see continued inflation in China due to rising costs, yet the world needs to see continued inflation in China as a sign of strengthening economy and increasing consumption. The Chinese worker now demands better wages and more benefits. The end of rising costs is nowhere in sight according to Joerg Wuttke, he believes that we may see up to 200% increase in the cost of manufacturing in china by 2020.

As manufacturing costs increase we can expect companies to take their business elsewhere, and a mild slowing down of china’s economic growth. However, China will sustain itself if this is the case thanks to its booming domestic market. So while large companies will likely avoid increasing costs by moving production elsewhere, the Chinese economy will not be doomed to fail due to much of its inland revenue.

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