Tea leaves

A hiccup? Or a sign that imported deflation—via low-priced Chinese imports—will now start to slow?

"‘Labour availability is tight right now in Guangdong compared to other regions,’ said Paul Hussey, chief executive of Strix. The Isle of Man company, which dominates the global market for thermostatic controls on electric kettles, maintains most of its manufacturing operations in the provincial capital, Guangzhou." Extract from FT.com - Labour shortage hits China export recovery

According to the FT, China's economic stimulus program has increased investment and employment opportunities in the hinterland provinces, reducing the availability of labor in the coastal manufacturing hubs.

If this is not merely a temporary effect of the stimulus but the start of a long-term shift of industrial production away from China's coast it would not be a surprise to find that it was oriented more strongly toward supplying domestic demand than export markets. Transport and handling costs, for example, would make domestic markets a prior target.

Tags for this entry: china macroeconomics stimulus