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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (66159)	6/13/2007 4:41:57 PM
From: ajtj99	Respond to of 116555

July 1st nearly everything exported from China will increase in price 4-13%, with an average of 8%, due to a change in the reimbursement of the VAT tax. I just saw the category list covered by this change, and it was about 9,000 categories of items. That should translate to about a 5% increase at the consumer level. The Chinese currency is also appreciating at a steady rate of 0.4% per month, and this should continue into Jan. 2009. I anticipated this VAT rebate change would likely happen as the China government is resisting US pressure on the currency issue, but they are trying to front-run the effects of the recent counterveiling duty on coated paper exported from China as well as pending congressional legislation. The change is a win for the central and local governments in China, as the tax collections will soar. It will also cause some short term pain for manufacturers and trading companies in China. The net effect will be felt by consumers around the world in the form of higher prices for Chinese goods.