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We have discussed how high oil prices are affecting China. It is difficult to gather statistical data on the situation, but anecdotal evidence is accumulating, and much of it indicates the sort of problems we were concerned about. For example, we are told that there were extremely long lines at a gas station on the Nanjing-Shanghai highway on Sunday. By Sunday evening, the station was closed, with a sign saying that they were out of gas.
In another anecdote, a discussion was held with a small manufacturer of a simple consumer product in Shandong province. He reported that increased competition, labor costs and the rise of the yuan have all worked to decrease his profit margins until they were barely positive. He reported that he could not afford to raise prices because of competition, but that he was still covering costs. He also reported that seven of his competitors in Shanxi province had recently closed their doors.
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