Part of China's business strategy has been to keep the price of products, particularly exports, artificially low by devaluing its currency in order to keep labor costs down. By relaxing the country's fiscal policy and injecting more money into the Chinese economy, the central bank's decision could have a domino effect on Chinese manufacturing costs. First, easier access to loans for business could increase labor wages, causing an appreciation of the yuan, which would spur more internal buying by the Chinese. This activity will likely increase the country's inflation, with an end result of higher costs of goods to China's main customers: us.
- Places:
- China
Kyle A. Richardson is the editorial director of Promo Marketing. He joined the company in 2006 brings more than a decade of publishing, marketing and media experience to the magazine. If you see him, buy him a drink.