Saturday, May 29, 2010


Wages rising, exports falling, imports artificially enjoined, centrally planned manufacturing benefiting a misguided mercantilist strategy.

...and the U.S. has a plausible reason to think the Chinese will appreciate the Yuan?

The biggest eye-opener for multinationals in China recently has been a
nine-day-old strike at a sprawling Honda transmission factory here in
Foshan, about 100 miles northwest of Hong Kong.

The strike, which has forced Honda to suspend production at all four
of its joint venture assembly plants in China, has shown that Chinese
authorities are willing to tolerate work stoppages at least
temporarily, even at high-tech operations on which many other
factories depend.

Chinese policy makers are trying to let wages rise to create the
foundations of an economy driven by domestic demand, without derailing
the export machine that has produced the world’s strongest economic
growth over the last three decades.

Even before the strike, manufacturers and buyers of low-cost products
were already actively seeking alternatives to China, like Vietnam and
Cambodia, said Richard Vuylsteke, the president of the American
Chamber of Commerce in Hong Kong.

“They’re looking very seriously, and we’re seeing that in apparel and
footwear,” he said. “A lot of our members are seeing appreciating

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