If the Chinese currency strengthens, the yuan-denominated wage increases will have an even-more-inflationary effect on the cost of China-made goods selling at your local Wal-Mart
Baltimore, MD (Vocus) June 23, 2010
The financial markets have been rocked by the BP oil spill. But, there’s another development – happening halfway around the world – that could have a much greater impact on the global economy, according to a new article from Money Morning.
Before this month, chances are pretty good that you’d never even heard of Taiwan’s Foxconn International Holdings. And yet, Foxconn is one of the world’s most-important manufacturers – with a list of clients that includes Intel, Sony, Apple and Microsoft.
Now, Foxconn is at the center of the revolution over labor costs that is currently unfolding in Mainland China.
And, in the wake of China loosening the yuan’s de facto peg to the dollar, the Foxconn incident could prove to be more than an isolated incident. In fact, the Foxconn incident could hit the global economy much harder than even the BP oil spill.
Money Morning Contributing Editor Martin Hutchinson, a former merchant banker and market historian, thinks that China’s decision to let the yuan appreciate against the U.S. dollar will actually magnify the impact of this incident.
“If the Chinese currency strengthens, the yuan-denominated wage increases will have an even-more-inflationary effect on the cost of China-made goods selling at your local Wal-Mart," says Hutchinson.
In his new article in Money Morning, Hutchinson explains:
· Why the fallout from the Foxconn incident will be felt worldwide
· Why Foxconn will only be the first of many Chinese companies forced to raise wages for their employees
· How to invest in a world where cheap Chinese labor no longer exists
Find out everything you need to know about the “Foxconn Effect” in: Why China’s Foxconn Will Hurt the Global Economy More Than the BP Oil Spill
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