One way to measure inflation is with a consumer price index which measures, as you should be able to guess, the prices consumers pay for things. Another measure is called the GDP deflator which also measures other stuff. In an economy like China where a large share of production is for export, it’s perfectly possible for the price of “stuff in general” to rise faster from the price of “stuff people buy” on a consistent basis. And, indeed, this is what seems to be happening:
Kash Mansouri notes that this implies that Chinese wages are rising faster than productivity which reflects the fact that Chinese manufacturing wages used to be much lower than the marginal productivity of the manufacturing sector. He attributes that “the communist, command-economy system that dominated in China prior to the 1990s, which kept wages artificially depressed.” I think it probably has more to do with the low labor productivity of wet rice cultivation. But either way, the point is that there was this basically one-off opportunity to build a modern factory and hire a bunch of Chinese dudes to work there for much less than their marginal productivity. Economic theory predicts that you can’t keep doing this forever, and now the window of opportunity looks to be closing.
This should be good news for working-class Americans, who’ve borne a lot of the adjustment costs of this arbitrage, but unfortunately they’re now suffering through a catastrophic shortfall in aggregate demand.