China's Increasing Standard of Living
I am of the position that while long term China will probably have an increasing standard of living, or at least there will be a growing "middle class," short term China is going to go through a painful correction. I also find it highly unlikely that the masses will see much in the way of an increase in standard of living simply because there are too many people there and not enough of the essential resources, like water.
Well, events in the news seem to be supporting my take on it, South Korea Quits China Over Rising Wages. In this piece you see that businesses have been taking losses, something like 20-30% of the 6000 South Korean business in China are losing money. Their solution, just leave and not pay the workers pay that is owed to them.
The article says minimum wage is up 43% over 3 years. I've seen double digit inflation figures so, 12% per year for three years compounds is 41%. The increase to the standard of living is really quite small here. At 10% inflation the 3 year cost of living increase would be 33%. Workers making $107 per month aren't going to be forming any kind of middle class in the near future, and lots of them are now losing jobs due to these factories closing in the night.
This is going to put downward pressure on wages. And, other businesses will rise prices to stay in business.
And the economists are mystified when the increase in cost of imports exceed expectations...
China is already experiencing the pains of a correction...