Chaotic worldwide economic conditions

I just had a fascinating conversation with a client who has goods manufactured in China. One of the reasons that goods are manufactured more cheaply in China (and many other countries) is because the government subsidizes production (not merely that labor is cheaper, although I suppose it's all intertwined). Now, with oil prices skyrocketing, the governments can't afford to subsidize industry at the same level, so the cost of manufacturing is skyrocketing. For his products, the price is up 30-40% over the past 6-8 months. (His products are plastic so include oil as a raw material; of course, oil also affects transportation costs of raw materials and finished goods.) He describes that industry in China is unsophisticated about cost accounting and cost control, because it is relatively uninterested in profit and has little ability to control costs due to government's unilateral choices about funding. The management skills that would be required to manage for the rapidly escalating fuel costs just don't exist there, so the Chinese manufacturers can't say what price they'll sell for until about the time they ship, so orders have to be placed without knowing the cost or with little notice. (Manufacturing contracts, where a price is specified for future sales, are essentially unenforceable, so there's no protection against this kind of price fluctuation.) The result for my client is completely unpredictable cost of the goods he sells. The cost increases have been so rapid that he is having a difficult time committing to the price that he will sell at. He has to tell customers that they must place an order for October now, but he won't be able to tell them how much it will cost until September, for example.