China’s Wages

by Elaine Schwartz    •    Jul 21, 2010    •    738 Views

Because I am still reading Peter Hessler’s Country Driving A Journey Through China, I related a recent NY Times article to his wonderful descriptions of an expanding transportation infrastructure, villagers migrating to cities, and more affluence. Saying that textile jobs were shifting to Bangladesh, Vietnam, and Cambodia, the NY Times article focussed on higher Chinese wages for unskilled labor. Then, combining all of this with other articles on striking workers at auto plants, I assumed that Chinese wages were rising. 

But it is never that easy.

I checked further and discovered that not everyone agrees on the status of Chinese wages. In a rather interesting debate at The Economist, several experts present different perspectives. One Peking University professor said that although wages have been rising, demographic data indicate that the era of “cheap” unskilled labour has not ended. Similarly, Morgan Stanley’s Stephen Roach says that “Chinese wage convergence” has a long way to go. A third commentator looks at a shift that has begun and economist Tyler Cowen says that instead, we can focus on Chinese productivity.

The Economic Lesson

I guess all of this returns me to, “It’s complicated.” Involving a huge work force, many businesses, and a powerful government, a changing Chinese economy requires a closer look when someone states a clear and logical conclusion.

Also I will let you know more when I finish the “factory half” of the Hessler book. I am looking forward to it. 

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