The Final Nail In China’s Deflationary Coffin: Wages In The 4 Largest Cities Are Now Dropping

The Final Nail In China’s Deflationary Coffin: Wages In The 4 Largest Cities Are Now Dropping (ZeroHedge, March 12, 2015):

Remember when during the inflation panic of 2011 we reportted that “Wage Inflation is Rampant In China As More Provinces Plan Minimum Salary Hikes.” and wrote:

By the end of 2010, 30 provincial-level regions had raised the standard for the minimum wage, with an average increase of 22.8 percent year-on-year., Yin Chengji, spokesman for the Ministry of Human Resources and Social Security (MHRSS), said Tuesday. According to him, 29 provinces have issued the guideline for the minimum wages, and the benchmark line grew about 2 percent. In Shanghai, the local minimum wage was the highest nationwide, totaling 1,120 yuan ($170.2) per month.”

And 2011 will be even worse: “Also, according to a China Business News (CBN) report Tuesday, in 2011, many areas would continue to raise the standard. A Xinhua News Agency report Wednesday revealed that northern Chinese city of Tianjin is considering raising the minimum working wage by 16 percent this year amid rising inflationary pressure and labor shortages.”

Well, kiss all that goodbye. From Shanghai Daily:

Shanghai remained the top Chinese city for average monthly salary, but major cities saw their salary decline, recruitment portal Zhaopin.com said in a survey.

Shanghai’s average monthly salary was 7,108 yuan (US$1,135) while Beijing was second with 6,585 yuan and Shenzhen with 6,285 yuan came in third, the survey covering job postings on the website after the Spring Festival found. But Zhaopin.com didn’t reveal the sample size of the survey yesterday, citing business reasons.

But the average salary in Shanghai fell from last year’s 7,214 yuan in line with the 6 percent decline from a year ago to 6,518 yuan in the four largest Chinese cities, the survey showed.

Next stop: full blown deflationary prolapse and a PBOC that must scramble to do anything and everything (such as this) to halt the plunge.

2 thoughts on “The Final Nail In China’s Deflationary Coffin: Wages In The 4 Largest Cities Are Now Dropping

  1. The EU and China now in deflation…………how long before it spreads its poisonous tentacles into the US economy as well?

    Deflation sucks, it destroys any prospects of growth.

  2. With respect, deflation helps the prudent savers of this world and hurts those who recklessly lent money and those who recklessly borrowed it. During deflation those reckless lenders and borrowers will be found out and bankrupted debts written off probably with a modern debt jubilee similar to practices in ancient times.

    It is inflation/high inflation that rewards reckless borrowers by devaluing over time their debts enabling easier payment. Inflation is bad for savers who suffer this stealing of value by stealth engineered by Central Banks and Governments.

    Let good deflation happen. Interesting times ahead. We shall soon see who are the pigs with their snouts in the trough.

    Cheers

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