"China's Communist Party has just kicked off a third wave of economic reform. It's a process that should benefit Chinese workers, improve the global environment and lead to higher prices for American consumers.
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The third wave, just getting underway, is an effort to push China's manufacturing platform up the value-added chain. Today, most of China's exports are just assembled from imported components, and Beijing is hoping that in the future, more of the profit-creating parts will actually be made in China. The government is raising the minimum wage and enforcing environmental regulations. It's also eliminating subsidies for the export of low-value, dirty products ranging from leather to toys, and steel and chemicals. This doesn't mean China will quickly go high-tech, but Beijing is saying it no longer wants to be the world's sweatshop for junk.
All of this is great for Chinese workers and the environment, but it also means that the global deflationary impact of cheap Chinese goods is coming to an end. Now all of us will have to pay part of the cost of higher Chinese wages and limits on overtime, and as Beijing enforces pollution controls, we will all have to start paying part of that expense, too."
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