China’s inflation has become a headache for the government, so it is raising the minimum wage to calm down complaints about the consumer price index. Moming Zhou from MarketWatch.com reported the full story:
In an effort to calm grousing consumers as prices rise to 11-year highs, China is raising minimum wages across the country, a move analysts fear could further stoke inflation.
Guangdong , China’s richest province, said it plans to raise minimum wages by as much as 18% in some cities starting April 1. The decision followed similar actions in other areas, notably the major cities of Shanghai and Beijing. Tibet , an autonomous region administered by China’s central government, raised minimum wages by nearly 50% at the beginning of this year.
The wage increases, aimed at relieving food and other price pressures, could instead fuel inflation, analysts said. Higher wages are also likely to raise prices of U.S. imports from China, and possibly reduce China’s attraction as the world’s manufacturing center.
China is wrestling with consumer inflation that accelerated to 7.1% in January, up from a 6.5% rise in December, the National Bureau of Statistics reported last week.