Chinese Feeling The Pinch

'Pinch' may be too strong a word while the Chinese economy is expanding at the enviable rate of 9.1%. HSBC's manufacturing index for China showed a preliminary uptick in August 2011 to 49.8 from July's 49.3, but anything below 50 is considered contraction. Small manufacturers in China are starting to take hits on falling orders while also dealing with tighter credit and absorbing rising wages -- central bank pegs labor costs in the second quarter 2011 rising 10% to 30% over last year. An article in the Wall Street Journal noted small businesses are being forced to accept receiveables, a kind of IOU, instead of payment and that payments are being stretched out.