Chinese Workers Pay Is Increasing

BusinessWeek reports:

Wages are going up even without the government’s prodding. The development of China’s west has turned interior cities such as Chongqing into production centers that compete for labor with coastal factories. The pay of the migrant laborers who fuel China’s export industry rose by 40 percent in 2010, according to Credit Suisse’s Tao. It will continue climbing 20 percent to 30 percent in each of the next three years as Chinese leaders pump up domestic demand.

Workers are getting picky. A recent pay hike of more than 10 percent in a Shenzhen bra factory wasn’t enough to keep some workers in town. Luo Chenen, a 33-year-old migrant worker who sews bras for Hong Kong-listed Top Form International, says “quite a few” of her colleagues left after the lunar new year for their hometowns. They won’t come back because “there are jobs there as well. Right now is not like in the past, when finding a job was difficult.” As proof of employers’ desperation, the district of Shenzhen where Luo works is plastered with recruitment notices, some promising “High Pay for Urgent Hire.”

It’s not just in China’s big cities where wages are rising fast. In the countryside, where small factories are popping up, per capita net income jumped 10.9 percent in 2010, to 5,919 yuan, according to a National Bureau of Statistics of China report in January. “Rural migrant workers’ wages are now rising faster than ever before, and we can probably talk about a wage explosion here,” Jonathan Anderson, chief economist for emerging markets at UBS (UBS) in Hong Kong, wrote on Feb. 3.

Full story here.

4 Responses to “Chinese Workers Pay Is Increasing”

  • China’s growth has been amazing and is the main driver of the world wide reduction in poverty that we see over the last 30 years. So it’s important to think about what China has done right. Stigltitz has a book/talk called “Making Globalization Work”. He says that China opened it’s market to capital investment, but blocked the market to short term speculative capital flows, particularly on currency. So for him the key is allowing states to manage the way globalization occurs within their own countries.

    China is pretty big and able to resist the demands of the US. Other places just don’t have the strength (Latin America, Mexico) and for them globalization has been very harmful.

    It’s a good talk you may enjoy and I’d be interested in your thoughts. Not sure where it is online but I can make it available to you via Dropbox or something like that if you like.

  • Sure, send it over.

    For my general history of China, see here.

  • DeLong discusses another important factor. Blocking trade liberalization at the early stages. He says it harmed them economically but was necessary politically. OK. Funny that they are doing so well economically though whereas the countries that don’t have the power to impose import restrictions are doing so poorly.

    Here’s the common thread. They are powerful enough to block the demands of outsiders and are able to globalize on their own terms. The key is independence.

  • What do you think about his closing remarks, regarding Argentina?

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