Wage Protests, QE and China

Phoenix Capital Research's picture


While the cost of living has become a problem for some in the US (courtesy of the Fed’s inflationary policies) it’s become a real nightmare for many in the emerging markets where as much as 50% of income is spent by consumers on food.


As a result, we’re beginning to see more and more workers demanding pay raises.


Farmworkers demanding higher wages in South Africa’s biggest table grape-growing region resumed protests today in the absence of new talks between the government, labor unions and the main farmers organization.


About 150 people protested peacefully near a shanty town outside Worcester in the Western Cape province, demanding that the minimum wage be increased to 150 rand a day ($16.92) from 70 rand. In Stofland, on the outskirts of De Doorns, about 50 people marched through the streets of the settlement singing songs and carrying banners of the United Democratic Front, a civil rights group.




Spreading protests and escalating demands from Indonesia's labor groups could delay or even derail spending on the country's overburdened infrastructure, industry leaders warned.


Jakarta's governor agreed to increase the minimum wage in the capital by 44% this week. As other regions are expected to follow suit, the populist move could trigger higher wages and inflation and discourage investment in Southeast Asia's largest economy, say some analysts and executives. Unions say workers deserve higher wages, better benefits and better job protection as the country's economy blossoms.




Nearly half of the bus drivers from China who were involved in a dispute over salaries on Monday did not show up for work on Tuesday morning.


SMRT said 88 of the 171 drivers who refused to work on Monday did not report for work again on Tuesday.


SMRT said it takes a serious view of the bus service delays that were brought about by the irresponsible behavior of the bus drivers who did not report for work as scheduled.


It said SMRT's priority is to ensure that bus services are restored to normal as soon as possible.




There is no indication this trend will be ending. Once wages begin to rise aggressively is when inflation really begins to take hold in the system. This process has begun and will accelerate in the coming months.


With food prices already high, the Chinese Government is desperate to channel the country’s frustrations towards an external problem rather than face rampant civil unrest.


Thus far the focus of this has been Japan (the long-­?standing dispute over who actually owns the Senkaku islands). But with the Fed now announcing QE 3 and QE 4 (which will push food prices even higher), we will see a resurgence in the US/ China conflict: more accusations of currency manipulation, trade wars, and other political issues.


In plain terms, the Fed has handed China another problem (even higher food prices). Don’t expect China to ignore this. Indeed, with higher food costs on hard, China won’t be able to engage in another massive round of stimulus, no matter what the “experts” suggest.


Indeed, in late December at the Central Economic Work Conference the new party leader Xi Jinping literally stated that China would not be pursuing growth rates through stimulus.


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Graham Summers

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Seer's picture

Any chance that the agitation in Africa might be US-sponsored?

[US] Citizens, always know what your AFRICOM is up to!

verum quod lies's picture

Wasn't the author one of those those guys that keeps saying that the Fed will stop QE any minute now (actually last year)? It seems to me that he is now saying the race to printopia is not over in China, let alone the US.


Edmon Plume's picture

SMRT said 88 of the 171 drivers who refused to work on Monday did not report for work again on Tuesday....

and their bodies have not been found.


Element's picture



"... Indeed, in late December at the Central Economic Work Conference the new party leader Xi Jinping literally stated that China would not be pursuing growth rates through stimulus. ..."

And you believe that complete baloney is credible?

Nov 2008 - Chinese economic stimulus program - $586 billion USD
Sept 2012 - China approves $157-billion USD infrastructure spending

Nov 8th 2008 - $586 billion USD stimulus

Sept 7th 2012 - $157 billion USD stimulus
Thus the new wave of Beijing stimulus-spending less than 4 months ago was ~26.8% of post-Lehman global emergency shock stimulus.
But the above linked article further says:

" ... * Follows earlier announced local government spending plans ..."

So the total stimulus figure is probably much larger than than 26.8% of 2008. In other words, Sept 2012 spending was a major economic-crash avoidance program. So along comes a shiny new suit, in December, who merely claims China will not be pursuing growth rates through stimulus, this time is different, and you ignore the above reality, in preference for patently obvious Chinese state-propaganda and BS.


You will of course be proven comprehensively wrong - yet again.


(and of course the above facts imply you already are wrong, but nevertheless there will be more emergency-stimulus spending chasing GDP to come)

Seer's picture

Growth at all costs!

The grow-or-die paradigm demands that no holds are barred.  The US pushed it virtuously via manipulations by the financial sector; and now it's being spoon-fed directly by the government.  There's really a limit on the permutations.  In my mind it's always been clear how this was going to go for China (as well as the US).  The race is on to see who can connect up the most people to the MATRIX.

Buck Johnson's picture

As we have exported inflation, we have exported hyperinflation.  This isn't going to end well for the US thats for sure.

Freddie's picture

Let them eat The Ben Bernank and Obama cake.  These communists in China and muslims in Indonesia love our Indonesian muslim.  They voted for it.