Anorak News | So what’s going to happen to Chinese manufacturing? There’s been a run on peasants

So what’s going to happen to Chinese manufacturing? There’s been a run on peasants

by | 20th, February 2012

I KNOW, I know, all those jobs we packed up in boxes and shipped off to China. The Ruin of the North, as bad as anything Willie the Conq did a millennia ago and all due to this neo-liberal globalisation shite.

However, at some point this is all going to run out of steam, right? Something’s going to change? And yes, this is true, something is going to change, as this New York Times piece shows:

But while China’s industrial subsidies, trade policies, undervalued currency and lack of enforcement for intellectual property rights all remain sticking points for the United States, there is at least one area in which the playing field seems to be slowly leveling: the cheap labor that has made China’s factories nearly unbeatable is not so cheap anymore.

China has experienced sporadic labor shortages, which in turn have driven up its once rock-bottom labor costs.

There are two things going on. The first is that until very recently there were hundreds of millions of peasants stuck in that idiocy of rural life. If offered a manufacturing job at nearly any pay they’d take it. Even 12 hour shifts making iPads for $100 a month is better than being arse deep in a rice paddy all day.

But those peasants are either now all in the factories or rich enough out there on the farms that they won’t move. Which means that to get the labour required to run the factories wages have to rise. The companies are now competing with each other for labour instead of just sucking in more peasants.

So, Chinese wages are rising after inflation by 10 % and more a year. As they have been for a decade or so. What everyone said is coming true in fact: that European wages and Chinese wages will converge. But they’ve been converging in the way that economists insisted they would, not as the scaremongers said. As Chinese labour in general gets as productive as European labour in general then Chinese wages will rise to European levels. As has happened in the past in S Korea, Japan, Hong Kong and in fact everywhere else the same thing has happened.

Low wages rise, not high wages fall.

And what’s going to happen then, when Chinese wages are at European levels? Well, pretty much the same thing that happened here in Europe. There will be a mix of two things. Firstly, some manufacturing will go off to where labour is still cheap. Vietnam, Cambodia, Laos, making people there richer over time. And many of the jobs will simply disappear into the ether as machines replace people. And this has been happening even in China: there are now fewer manufacturing jobs in China than there were 20 years ago.

The end result of all of this is that just about everyone will be working in services, just as we do, and just about everyone will be rich, as we are (hey, compared to the past we are!). Which is, pretty much, what everyone wants, isn’t it?

That the poor become rich?


Posted: 20th, February 2012 | In: Money Comment (1) | TrackBack | Permalink