China is transfering inflation worldwide

China is transfering inflation worldwide
Time:2017-04-13 From:

Almost all the Chinese producers are complaining higher and higher cost of both raw material and human resource, thus Chinese exporters are feeling the nowadays business are getting harder and harder due to the higher exporting price.

The reasons are mainly as below:

1), Energy price rising

To reform the economic structure, control the pollution problems, China is controlling the coal’s output, regulating the working days can not exceed 276 days per year, caused the coal price was more than doubled than 2015;

2), Higher cost in transportation

Overloading was a regular phenomenon before 2016, but from 2016.09.21, a strict law was launched to punish the overloading behaviors, caused the transportation cost is almost doubled too;

3), Booming real estate market

From end of 2015 till now, many big cities’ real estate price was raised by by 40~100%, caused the increasing demand of many products for construction industry, also caused higher living cost of labors;

4), Monetary high

The world capital and commodities market are focusing on US Federal Reserve System’s monetary policy, actually China’s policy is also playing an important role, the latest report shows that China’s 2017 target of M2 increasing rate is 12%, which is called a positive monetary policy, and China has stick to this positive policy for many years, the accumulating effect is getting more and more obvious;

5), More and more strict control in environmental protection

In the past only when there was a big event like Beijing Olympics or APEC, the government would request to close many factories to reduce the pollution, while from 2016, the target of this policy is not only for some big events, but for the real environment. Dozens of inspection teams were sent out from Beijing to nationwide to supervise the action and effect of the local government, and this is directly connected to the promotion of local governors and officers;

6), Speculating of traders and capital players

Inspired by government’s firm attitude, the speculating accelerated the price rising for many commodities. It’s said one company named Shanghai Chaos Investment is stocking 6000mt Cobalt, occupying 17% of the world output, caused the price was doubled in a shore time.

Because China economy has been very deeply connected to the world, when China is exporting higher price products worldwide, the side-effect is that the inflation is also “exported” out, to understand this effect, below table shows clearly how deeply connected for the Chinese products and world economy:

 

Item

China qty (2014)

Occupy the world's qty

Industrial Products

Autos

24 million

25%

Vessel

65 million ton

42%

Engeering machinary

59 billion USD

43%

Computer

246 million

68%

TV

118 million

50%

Refrigerator

73 million

65%

Air conditioner

109 million

80%

Cell phone

1 billion

70%

Washing machine

61 million

44%

Microwave oven

68 million

70%

Digital camera

82 million

65%

Basic material

Crude steel

627 mln ton

44%

Cement

1.9 bln ton

60%

Aluminum

16 mln ton

65%

Copper

4.6 mln ton

24%

Coal

3.2 bln ton

45%

Fertilizer

67 mln ton

35%

Plastic

55.5 mln ton

20%

Fiber

31 mln ton

43%

Glass

31.5 mln ton

50%

 

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