Growing numbers of economists are sounding warnings that rising cost pressures and wages in China mean that it may be starting to export inflation. Analysts fear that the era when Britain and other big Western economies could depend on steadily falling prices for Chinese imports to keep a lid on inflation and allowing their economies to grow faster without sparking price pressures, is ending.

The threat of a new wave of China-fueled inflationary pressures has been thrust on to the agenda by official US figures, not previously available, which show that after years of steep falls, the cost of Chinese exports to America began to rise very sharply last year.

The very steep gains in America’s Chinese import bill were fuelled as sharp falls in the dollar cut US buying power abroad. But City economists are now increasingly concerned over signs that the same price pressures from dearer Chinese imports are emerging on this side of the Atlantic. With China also pricing many of its goods for export in dollars, and the pound now tumbling against the US currency, the inflationary threat to Britain could be magnified.

Source

We’re doomed! Doomed I tell you!

Oh, wait markets adjust to this kind of thing.

Never mind.

China, Economics

This entry was posted on Wednesday, January 9th, 2008 at 10:57 pm by Chad and is filed under Big Thoughts. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.