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Wednesday, February 2, 2011

Is China Reaching a Lewis Turning Point ?

In his recent SEEKING ALPHA post,  'China in the Midst of a Lewis Turning Point, Coupled With Nasty Inflation',  blogger Russ Winter argues that such is the case :

Clearly China is smack in the middle of a Lewis Turning Point, which marks a time in the development of an economy when the surplus of cheap labor runs dry. In response, (surviving) employers push up wages and benefits, creating demand-push inflation. The nation is losing much of its original low-cost competitive advantage. China will be a much weaker growth story (if at all) under this evolving model. And customers, such the U.S., are facing diminished supply and rapidly rising prices on Chinese goods.
For previous articles on this subject, check out Bloomberg/Business Week's 'China Reaches Lewis Turning Point as Labor Costs Rise'  ,  Aoyu Bai's SEEKING ALPHA post, 'China's 'Lewis Turning Point': Twilight of an Era' , and Yueqing Jia's post on the World Bank's blog, 'Lewis turning point and China's FDI prospects'.

(FDI = 'Foreign Direct Investment')

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