2017 What are the causes of the skyrocketing prices of raw material in China?

Recently, with the rising prices of raw material and the increasing of logistics costs and labor costs, the cost burden of each enterprise in China is increasing. Product price rising has become a hot topic, some manufacturers have already increased the product price. What are the causes of the current skyrocketing raw material prices? 

1.National policy Because the elimination of backward production capacity and excess capacity in 16 industries like paper industry, electricity industry, iron and steel industry and ect. substandard factories have been shutting down one after another. The capacity decreased rapidly, thus demand led to rising prices of raw materials. What’s more, many enterprises compete in the market with low price and informal operation which leads to the low average industrial price, so there is a great difference between the before and after. 

2. Labor costs rise The national minimum wage increases more in 2016, in terms of Hefei, from the original 1260 RMB / month rise up to 1520 RMB / month. Due to the rapid aging of the population and the scarcity of the working population caused the labor shortages, so companies competing to improve labor treatment to retain workers. But the coast and the Pearl River Delta's labor shortage often comes from the high cost of living and the un-matching working salary, a lot of workers go back to inland enterprises so there is not enough manpower to reach a predetermined capacity, indirectly enhances the labor cost. 

3. Packaging costs rise Because of the rising prices of wood pulp and straw pulp, the rectification of paper-making enterprises, the close of small workshops, remain several large domestic enterprises to meet the national wide demand for raw materials which is difficult, so prices rising is not difficult to understand. The corrugated paper prices rose almost 100% 

4.Logistics costs rise Since the implementation of the provisions of the regulations of highway vehicles loading exceeding management on 21st September 2016, the logistics industry has begun to raise fees, resulting in the rise of commodity logistics costs.