Economic Trend News
- Cheap exports temporary: Nobel economist
Date: 15-Jun-2007 Sources: (Shenzhen Daily)
CHEAP Chinese exports are a temporary phenomenon, according to the 2006 winner of the Nobel Prize for Economics, Columbia University professor Edmund Phelps.
According to Phelps, China's rapid economic growth will run out of steam because the country's labor costs will rise.
Phelps made the comments Wednesday night at the annual conference of the Brazilian Association of Credit and Investment Institutions.
Phelps said China's low labor costs are widely considered to be the reason for its famed export competitiveness and current account surplus. But Phelps said such circumstances are ephemeral.
Phelps said Chinese consumer demand will eventually catch up to Chinese production, decreasing China's need to sell abroad and contributing to what Phelps sees as an eventual increase in real interest rates worldwide.
Phelps said low real interest rates have supported the current global investment boom, particularly in the United States.
Sponsor Results:
