What Is Painful to Americans Is Nothing to Russians

Imports from China to the U.S. are becoming more expensive. As a result, the danger of inflation in America is growing stronger. The Federal Reserve System will have to raise interest rates, warn economists. But according to a Nezavisimaya Gazeta expert, an increase in prices on Chinese goods will not be evident in our market. The reason is that the share of consumer goods imported from China is not high. Moreover, they do not enter through official channels as much as through suitcase traders.

The Wall Street Journal, the authority among American business circles, is sounding an alarm. The time period of more than a decade when inflation in the U.S. was falling is coming to a close.

The fact of the matter is that the lowering of prices took place due to the fact that poorly paid workers in China and other developing nations manufactured inexpensive goods, which filled the shelves of American stores. This trend improved the well being of American consumers and helped the Federal Reserve System stimulate the economy, establishing low interest rates.

But this time is coming to an end. Prices for imported goods are rising, becoming a source of inflation pressure. A wide assortment of goods manufactured abroad — those such as shoes, automobile parts and jewelry — are appearing in U.S. stores with tags indicating higher prices than before.

Prices for imports, excluding oil, have risen eight percent over the last two years. And if you add oil in, then the increase is even greater.

The main reason is that workers in China and other countries with emerging markets are receiving higher wages and are themselves buying more goods. This shift became part of the changes defining the development of the American economy and impacting the role of the U.S. in the world.

Currency rates are also important here. For a long time, Washington has been nudging Beijing to revalue the yuan and promote the growth of consumption within the country. To a certain degree, China has taken steps in this direction. The yuan has risen 28 percent in relation to the dollar over the last six years. A stronger yuan and an increase in prices in China, thanks to the demand of Chinese consumers, have pushed the price of items that Americans buy higher.

The changes are especially strongly felt in the areas of trendy clothing, fashion jewelry and shoes. By the fall, according to calculations by the heads of American trade networks, these goods will have increased in price by four to six percent on an annual basis.

But how will the rise in prices on Chinese imports be manifested for Russia? We turned to Andrei Ostrovsky, deputy director of the Russian Academy of Sciences Institute for Far Eastern Studies, with this question.

This process will not be reflected back onto us in any way. First of all, the share of consumer goods imported from China is not high. If, according to information from Beijing, the total volume of Russian-Chinese trade was $55.3 billion, then Chinese imports into Russia were only about 15 percent. They primarily settle not in the European area of our country, but across the Urals in the Far East.

“Goods for the market are primarily delivered by suitcase traders,” the expert says. “I myself traveled with them across the Amur and observed how it is done. According to our laws, one person can take 50 kilograms of goods out of China tax-free. Teams of 20 people are formed up. The carrier is known as the ‘camel.’ The senior of the group is called the ‘torch.’ Upon returning to his homeland, he reports before the ‘brick,’ who settles with the man and usually sells the goods brought in.”

Russia is not a member of the World Trade Organization, so objects brought in through normal trade channels are taxed from anywhere from 10 to 50 percent. At the same time, you must take this into account: As if prices had not risen in China, this increase in comparison with ours is like a breath of wind. On average, consumer goods in Russia are five times more expensive than in China. Inflation in China does not seriously impact us, concluded the expert.