Wednesday, July 22, 2009

Chinese Growth Inflationists

I already posted on the "shocking Chinese growth opinion" by UOB Kay Hian yesterday, as the consensus opinion runs rather along the lines at Danske.

However, I read a commentary by Citigroup today:
Shenzhen cuts minimum wage benchmark the first time in 10 years — The municipal government's Labour and Social Security Department announced high, medium and average wage benchmarks, compiled from polling salaries across 20 industries. The three were cut by 8.5%, 3.9% and 3.8% to Rmb23,700, Rmb2,460 and Rmb2,750 a month respectively. Shenzhen offers the highest minimum wage in the nation.
Who is cutting minimum wages, if the growth story is so compelling? Wage cuts are generally a sign of what? I am struggling to see much positives for Chinese domestic consumer demand going forward.

Asset inflation and general (consumer) price level ... ?

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