Photo: Lin Pernille Photography
The days of being able to walk into a store and buy a pair of cheap jeans that were “Made in China” may soon be over.In fact, China’s role as the low-cost supplier of consumer goods for America may have already ended, according to a study published by the Federal Reserve Bank of New York.
As the chart below illustrates, consumer goods imported from China increased in price by 7% from the second quarter of 2010 to the first quarter of 2011.
From 1997 to 2005, prices of Chinese goods were on a downward trend when the RMB was pegged to the dollar, but since the RMB appreciated against the dollar, import goods saw a hike in prices, say the authors.
Sharp wages for Chinese workers could also be a leading cause.
But whatever the factors are, “the prospect of continued rising prices of Chinese goods seems highly likely,” meaning Americans had better get used to paying higher prices for “Made in China” apparel.
Even Vietnam and India might decide to raise their prices to stay ahead, argues the study. For the sake of our wallets, we hope they’ll choose to compete with China instead by keeping their prices low.