China is about to get lot more expensive!
Some 20 years ago we were being sold on Free Trade and Buy American at the same time. Both concepts seemed workable and for the first few years when we gave China Most Favored Nations Status in 1997 and cheap imports started flooding in and consumer spending was way up, it all seemed like a great idea.
But few years later as jobs were being lost with American manufactures outsourcing to China as well as under NAFTA to Mexico, we started to get the idea that something did not work for the best for us.
Yes, the American multinational corporations were investing heavily in China as the lure of profits was too real. After all, they could outsource designs made to American taste to the Chinese, place the order and rake the profits when the inexpensive products quickly sold on the American market.
We knew that the Chinese government made the cost of Chinese products just too tempting by holding the currency below its market value. Never mind at the time that Chinese workers were being poorly paid, we got what we wanted and the American manufacturers and importers made money.
Of course with the economic meltdown last two years and unemployment over 10% we realized that we cannot have Free Trade and Made in USA without needing to push the Chinese to float their currency to make our products more competitive. Recently the Obama administration slapped tariff on Chinese tires as a result of the Chinese government subsidies. The move was a right thing to do but we were criticized as the act was viewed to be anti Free Trade.
But never mind, we need to make the American goods more competitive, hence the recent pressure on the Chinese to float the Yuan, the Chinese currency. If they do, which is expected soon to happen, at last, cost of Chinese products will increase overnight, perhaps as much as 20%, if not more. As a result of this adjustment in the marketplace, products from many Third World countries will become more competitive, and importing from China may make less sense at least in certain products categories.
Cost of travel to China and around China too will cost more than before. Suddenly to book a tour to Yunnan, Guilin or Beijing will not be as cheap as before. Suddenly travel to India will no longer look as expensive.
If you still need to place an order in China or want to travel to China, do so soon, or be prepared to pay more.
