By Karafillis Giannoulis | May 17, 2013 - 11:45am
According to the Chinese National Bureau of Statistics, the Chinese wages in the urban areas increased to €3.639 in 2012. This is a 17.1 per cent increase in 2012, for private sector employees working in urban areas. However, the increase was smaller than a year before. In 2011, the wages were up by 18.3 per cent. In addition, according to the CIA World Factbook, inflation in China during 2012, stood at 2.6 per cent while in 2011 was at 5.4 per cent.
Overall, the GDP per capita for the biggest country by population in the world (1,349,585,838 people), was estimated at $9,100 in 2012, being at the 122th position in comparison with the rest of the countries. Still, Chinese private sector average urban wage growth has been rising steadily in line with the Chinese GDP. According to AFP, the pace of the specific Chinese wage is increasing more than doubling from 2009-2010.
Because of the rising Chinese wages and burdensome regulations, foreign companies are considering expanding their investments in other countries on the region. On 8 April, the New York Times said that Japanese, US and EU companies have started to invest in Cambodia, because they want to limit their overwhelming reliance on factories in China. However, it is considered that due to China’s fast growing domestic market and the expected increase in demand many more companies are building new factories in Southeast Asia to supplement operations in the communist country. Moreover, productivity in China is rising almost as fast as Chinese wages in many industries.
According to a separate commentary on the NBS website, public sector urban wages increased 9 per cent, adjusted for inflation, to €5,922 in 2012 from the year before.
What surprises most people is that wage inflation can be so high while overall inflation is now so low.
The reason is, primarily, twofold: First is the "productivity" mentioned in your article. Ultra-low-wage economies usually don't "automate" much because they really don't have to. As a result, once their wages become less competitive, they have tremendous potential to gain productivity because the first steps in automation are usually the ones that have the biggest impact. The result is that a country like China can mitigate a large percentage of wage inflation with productivity enhancers that a country like the U.S. deployed quite some time ago as the ones that are most obviously beneficial.
The second reason is that China is a substantial importer of goods, and as the Yuan currency is allowed to slowly rise in value, it has the effect of mitigating price increases that may have been put into effect by the producing country in terms of THAT country's currency.
All in all, China's high wage inflation and low general inflation is the Holy Grail for affordability and affluance when it comes to their decisions regarding taking a trip to macau. It is one of the bigger reasons I own LVS.
Real, inflation adjusted wages at nonprivate Chinese companies (state-owned and public enterprises) grew 9% in 2012, up from 8.5% in the previous year, while real wages in the private sector rose 14%, China's statistics bureau said Friday. On a nominal basis, wages grew at a double-digit pace even as the pace of economic growth decelerated. While the data show the country is continuing to push towards establishing "a normal wage increase system," manufacturers could feel the heat should wage growth continue to outpace economic growth going forward.
This whole topic is Very Powerful in terms of what it means for the next 2 years of growth in Macau and Sands. I don't think a lot of people realize just how tightly the consumerism spring is coiled right now in Greater China.
I don't see anything standing in the way of 15%-plus growth for 2014 either for Macau revenues... and there isn't a single resort being opened there from now thru 2015...
... talk about a supply crunch in a growth market fueled by huge increases in Chinese spending power!
The latest data from the China Foreign Exchange Trading Center, 410 central parity of RMB against the U.S. dollar at 6.2548, compared with the previous day rose by 91 basis points, and then earned a new high since the reform. Central parity statistics, since the beginning of this RMB against the U.S. dollar appreciated by 0.49%.
The Analysts said that the current foreign exchange market demand is still strong, it is expected that short-term RMB exchange rate will remain strong and continue to appreciate the space or limited. On the one hand, China’s balance of international payments, the RMB does not have the sharp appreciation of the foundation. The latest data show that our trade surplus of $ 880 million, is to increase the possibility of fluctuations of the RMB. On the other hand, the dollar is expected mid-strength, the Bank of Japan to implement radical devaluation, as well as slightly weak economic recovery in the context of adjusting the structure in China, the RMB exchange rate movements faced with a certain degree of uncertainty.
Overall, the yuan will continue to maintain two-way volatility, greater flexibility in the overall operation of the pattern.