China Exports Inflation to US

Coinciding factors exert upward pressure on prices
By Kevin Spak,  Newser Staff
Posted Feb 1, 2008 1:35 PM CST
Workers assemble toy cars at the production line of Dongguan Da Lang Wealthwise Plastic Factory in Dongguan, China Tuesday Sept. 4, 2007. (AP Photo/Eugene Hoshiko)   (Associated Press)
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(Newser) – After years of pumping out cheap consumer goods, China is driving up American price tags, the New York Times reports. As costs rise domestically, prices down the supply chain rise at the same time that recession threatens in the US. “China has been the world’s factory,” said one economist. “But its heyday is over. We’re going to see higher prices.”

Chinese export prices rose just 2.4% last year, but that helped raise US inflation 4.1%. Other countries have complained for years about China’s yawning trade surplus, so this year Beijing cut incentives for exporters. Tougher labor laws could also raise prices. In import-dominated sectors like toys, clothing, and footwear, US consumers could see price jumps of up to 10%.