Effective January 1, 2012, the minimum wage is going to increase by as much as 20% in Guangdong, the industrial province in China where most of the stuff you’ve bought in the past decade was produced. Which means you’ve got yourself a significant rise in consumer good prices worldwide incoming.

The wage increase is largely due to the high inflation that the Pearl River Delta, where Guangdong. That, in conjunction with relatively weak western currencies, means we can expect stuff to get a fair deal more expensive in the next 12 months or so. I mean, more expensive than we expected.

True, other cheap labour markets exist in other places – like Bangladesh – but if the Global Post’s experts are to be trusted, these lack the scale and infrastructure of south China, and are unlikely to provide a substitute, at least in the short term.

New data has showed a significant slowdown in manufacturing in China.

Analysts have warned that the trend will continue, which could be worrisome for government officials concerned with keeping up employment numbers. Still, China remains intent on producing goods higher up the value chain and is forcing the issue.

…
Another 18-20 percent pay rise would decimate the industry.

I, um. I don’t know if there’s a silver-lining angle to this story. I don’t think there is.

[Source: Global Post]