While manufacturers in China are struggling to meet demands for rising wages, the International Chamber of Commerce, one of the world’s largest business lobbies, said it could be a good thing from a protectionism standpoint.
Victor Fung, chairman of the ICC and head of Li & Fung, the world’s largest trade sourcing company, said higher salaries across China would lead to an increase in export prices, which would encourage US companies to purchase elsewhere eventually.
“The China/US trade surplus will be coming down. With that happening, the pressure for protectionist measures, including the demand for China to up value its currency dramatically and immediately, will come down. The wind will be taken off the sails,” said Mr Fung.
“In the long run, it is probably very good to China.”
According to the ICC, China is “by far” the biggest target of protectionist trade measures from countries around the world. It named Russia and the US as among the Group of 20 major economies as having the most protectionist measures, followed by India and Argentina. China was ranked sixth after Brazil.
The ICC, which promotes free trade, warned that trade protectionism among G20 countries has reached an alarming level, which could threaten global economic recovery, trade and employment.
“During a time of economic recovery such as this, the world needs fewer barriers to trade, not more,” said the ICC.
Stefan Wagstyl
Josh Noble
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