Inflation in Asia Echoes in U.S.

When costs rise in China and other Asian nations, U.S. consumers pay the price.

Asian exports to the U.S. are no longer the inexpensive bargains they once were as across-the-board inflation hits not only China, but South Korea, Japan, Vietnam and the Philippines, forcing increased pricing at the consumer level on almost everything shipped here from these nations.

Close to 50 percent of U.S. imports come from developing countries, with a substantial portion of those imports originating in Asia.

Last year China's exports to the U.S. soared to $321.5 billion, according to the U.S. Commerce Department. Imports could top that figure in 2008, a projected rate of growth surpassing U.S. imports from Mexico.

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Chinese imports account for 7.5 percent of U.S. consumer spending, and China is now our second-largest trading partner right behind Canada. But South Korea, Taipei and Vietnam, among others, have been increasing their share of the American consumer dollar.

Most major expenses in Asia's costs of doing business have gone up in recent months: energy, labor, raw materials, commodities, food stuffs, and distribution.

Global economics require that those costs be passed on, and at the end of that line is the American consumer. Accordingly, some experts have forecast price increases this year of as much as 10 percent on Chinese-made consumer goods and a corresponding increase in goods from other Asian nations.

This is not good news for the American economy, now facing the impact of a potential recession and its typical slowdown of consumer spending.

Among the goods we buy made in Asian nations are electronics, flat-panel television monitors, computers, household appliances, textiles, clothing, footwear, ceramic goods and toys. Anyone who shops on a regular basis would've noticed the recent price increases for these items.

Major U.S. sellers of Asian goods such as Wal-Mart, Target, Best Buy and other big box retailers will inevitably hike their pricing to maintain profitable margins.

Asia's inflationary spiral is driven by several factors including increased foreign demand for its goods, fast-growing domestic consumption and consequent increases in the price of food, hotter competition for semi-skilled and skilled labor, and in China, a new labor law regulating hiring, firing and other issues which may boost payroll costs.

Adding to the inflationary updraft are developing scarcities of commodities, raw materials and plastic as Asian economic growth accelerates and demand for these items increases.

Finally, a weak and perhaps still-weakening U.S. dollar doesn't help the situation. With a weak dollar, foreign goods become costlier in dollars.

Chinese Premier Wen Jiabao has recognized the problem of domestic inflation, which rose by 7.1 percent in January, and 8.7 percent in February as a serious problem. "The primary task … this year is to prevent fast economic growth from becoming overheated growth," he recently told China's National People's Congress.

His stated goal is to hold China's consumer price index to a 4.8 percent increase this year. Many analysts believe this figure is too optimistic and have forecast inflationary increases in other Asian nations as well.

An economic slowdown is hitting Americans in their pocketbooks, and inflation in Asia is worsening the blow.

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