ASIA Rising wages are weighing on China’s ‘miracle’ economy

Aug 01, 2007 | 07:11 AM |

The impact of Chinese inflation could prove to be bad news for consumers in Baltimore as well as Beijing

SINGAPORE The era of cheap Chinese exports could be drawing to a close, but that might not be all good news for American manufacturers.

Pigs, and pork, have been much on the minds of the Chinese lately. February saw the beginning of the year of the Golden Pig, a particularly auspicious event in the zodiac calendar that only comes around once every 60 years.

It was ironic, then, that just weeks into the new year a surge in pork prices began causing real discontent among Chinese consumers and a growing headache for the government. Pork, a staple food for most of the country's 1.3-billion population, is an important benchmark in China. Just as a sharp rise in beef or bread prices would hit the average U.S. consumer hard, the increase in pork prices—which rose almost 30 percent month-on-month in April—quickly sparked concern across China.

Analysts said that a rise in demand, and spreading incidents of disease, caused the price increases. But more important than the fluctuations in pork prices—which have since fallen—are the uncomfortable truths they are revealing about the Chinese economy.....