Caixin OnlineOpinionCommentaries In China, Fear Not Wage Inflation's Impact
04.26.2011 10:44

In China, Fear Not Wage Inflation's Impact

A new era of rising wages is dawning in China, but consumption and productivity will minimize the effects
By Shen Minggao

Demands for higher wages have attracted a lot of attention from investors closely watching China's inflation rate. China will soon enter a period of wage inflation, but wage increases will come too quickly.

Experiences in Taiwan and South Korea in the mid-1980s shows that if per capita GDP exceeds US$ 3,000, wages will significantly increase. In 2008, China's per capita GDP rose just over US$ 3,000. However, China is largely an agricultural country, and pay raises and their consequences will not be as serious here as they were in Taiwan and South Korea.

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