Cheap Chinese Labour Drying Up Rapidly

[Mikhail Liebenstein]

http://www.telegraph.co.uk/news/worldnews/asia/china/8409513/Chinas-workforce-dries-up.html

This is quite an interesting article and it does seem consistent with all the other news about huge Chinese pay rises etc.

I don't think it will be long before it becomes inefficient to manufacture in China. This will really bugger up some of our outsourcing Western firms , as prices will shoot through the roof and no one will be able to afford their wares. The Chinese won't turn into a nation of consumers and there will be low demand at the higher prices appearing in the west. I don't think this situation can fix itself until large pay-rises occur in the Western Economies. Could be a catch 22.

Really this is representing labour re-asserting its power after years of being trumped by capital.

[interestrateripoff]

If China won't revalue inflation will force them too.

[LJAR]

and this is a good thing - it means rising incomes and therefore rising living standards across china. If they want to remain competitive they will have to invest in machinery and education etc - and who builds/makes that sort of stuff?

India is next, but they have already got going with their IT skills.

Who knows, a generation from now we might be exporting to them!

[blobloblob]

Just look at the roads, schools and universities the Chinese have been building in sub-Saharan Africa. They've been aware of this for years and are prepared.

[Krackersdave]

Just look at the roads, schools and universities the Chinese have been building in sub-Saharan Africa. They've been aware of this for years and are prepared.

Sorry - but how's that going to help? Are you saying the Chinese will export cheap production and exploit the Africans?

[Tired of Waiting]

http://www.telegraph.co.uk/news/worldnews/asia/china/8409513/Chinas-workforce-dries-up.html

This is quite an interesting article and it does seem consistent with all the other news about huge Chinese pay rises etc.

I don't think it will be long before it becomes inefficient to manufacture in China. This will really bugger up some of our outsourcing Western firms , as prices will shoot through the roof and no one will be able to afford their wares. The Chinese won't turn into a nation of consumers and there will be low demand at the higher prices appearing in the west. I don't think this situation can fix itself until large pay-rises occur in the Western Economies. Could be a catch 22.

Really this is representing labour re-asserting its power after years of being trumped by capital.

The same happened with the "Asian Tigers" a couple of decades ago, remember? And with Japan in the 60s and 70s. And with Western Europe before that, and with America about 100 years ago. Development is spreading. That is all.

And the Chinese are consuming more than before. IIRC currently they already consume more than 90% of their GDP.

It is very good news.

It always happens coz when a country gets its act together they industrialise fast, employ everybody, and from then onwards employers have to compete for labour. It is supply and demand in the labour market as well.

This process has happened since the industrial revolution. That is why the "race to the bottom" is a (very silly) myth, coz countries develop, and with it standards go up - including wages.

Edited for clarity.

.

Edited March 28, 2011 by Tired of Waiting

[Tired of Waiting]

and this is a good thing - it means rising incomes and therefore rising living standards across china. If they want to remain competitive they will have to invest in machinery and education etc - and who builds/makes that sort of stuff?

India is next, but they have already got going with their IT skills.

Who knows, a generation from now we might be exporting to them!

Exactly.

It's a good thing - we go down a bit, they come up a bit - we end up with a fairer world.

We don't have to go down Durch. The world economy is not a zero-sum game. Some countries are being partners of China industrialisation, exporting to China, like Germany, Japan, Taiwan, Korea, etc.,

Edited March 27, 2011 by Tired of Waiting

[Tired of Waiting]

Sorry - but how's that going to help? Are you saying the Chinese will export cheap production and exploit the Africans?

By creating jobs. Or do you think a poor African is better off unemployed than employed?

Besides, if a new factory opens in an African town, it is up to the locals to decide if they want to apply for these new jobs or not. Right? No?

I really don't understand your point.

[blobloblob]

Sorry - but how's that going to help? Are you saying the Chinese will export cheap production and exploit the Africans?

Yes exactly.

[Ah-so]

http://www.telegraph.co.uk/news/worldnews/asia/china/8409513/Chinas-workforce-dries-up.html

This is quite an interesting article and it does seem consistent with all the other news about huge Chinese pay rises etc.

I don't think it will be long before it becomes inefficient to manufacture in China. This will really bugger up some of our outsourcing Western firms , as prices will shoot through the roof and no one will be able to afford their wares. The Chinese won't turn into a nation of consumers and there will be low demand at the higher prices appearing in the west. I don't think this situation can fix itself until large pay-rises occur in the Western Economies. Could be a catch 22.

Really this is representing labour re-asserting its power after years of being trumped by capital.

So on the one hand manufacturing is non-viable in China and on the other hand the Chinese have not developed a consumer economy. Almost overnight the entire Chinese economy will disappear in a puff of smoke and we have to shift manufacturing India and Indonesia.

[northwestsmith2]

This is 2008 but they have a long way to catch up.

Chart 1. Hourly compensation costs of manufacturing employees in selected economies and regions, 2008

As productivity increases fewer workers are needed to produce greater numbers of units and their pay goes up.

Overall the cost per unit falls, unless China is regressing they will either produce more units or the same number

with fewer workers on more money but still a lower cost per unit than before.

[Krackersdave]

By creating jobs. Or do you think a poor African is better off unemployed than employed?

Besides, if a new factory opens in an African town, it is up to the locals to decide if they want to apply for these new jobs or not. Right? No?

I really don't understand your point.

My point is this - how will building roads and schools in Africa help China avoid a collapse when the West ceases to buy it's products??

Nice attempt to colour me a racist by the way.. are you a NuLabour voter by any chance?

[LJAR]

China has been developing fast by taking people who were essentially doing not a lot and making them do stuff, but they are reaching the point (slowly) where this cannot work any more.

Now they have to invest in capital and learn how to be more efficient - so they use fewer man hours to complete any given task.

Efficiency and the use of capital are what has driven rising standards of living throughout history. Good on 'em, I hope in the no too distant future the average Chinaman lives as well as the average Brit does today.

Eventually Africa will follow suit I hope - but they have many political problems there.

[Tired of Waiting]

My point is this - how will building roads and schools in Africa help China avoid a collapse when the West ceases to buy it's products??

The west is not going to "cease" to buy Chinese goods. Production levels, prices and exchange rates keep adjusting themselves to markets. It's been happening since the industrial revolution.

(1) Nice attempt to colour me a racist by the way..

(2) are you a NuLabour voter by any chance?

(1) Where did I do that?!

(2) I am arguing using liberal economics knowledge, good old Adam Smith and David Ricardo.

[sundance_kid]

The west is beginning it's steady decline now that large swathes of its workforce is staring at retirement. Without that consumption the developing nations will feel the pain, the slack just isn't there globally to replace this dwindling consumption.

I'm pretty sceptical that Africa will ever be the civilised consumerist society China needs it to be.

I highly suspect we'll see the developing nations begin to fragment and turn on each other into civil unrest/war. The middle east is just the beginning. You look at the likes of Egypt and it doesn't matter what system they have, I just can't see their economy ever being strong enough to support the millions living there. The tyrants at present just provide a convenient head figure to point the blame at.

I suspect as it proceeds behemoth countries like China will eventually face the same problem.

[blobloblob]

The west is not going to "cease" to buy Chinese goods. Production levels, prices and exchange rates keep adjusting themselves to markets. It's been happening since the industrial revolution.

The whole world will continue to buy goods. Manufacturing gravitates to the parts of the world with with the lowest costs, providing they have the necessary minimum levels of infastructure, which includes workers who have the skills to do the job. Ultimately, it's who owns the production who will make the money out of it. China is merely making sure that, when they price themselves out of manufacturing, they will have somewhere else to do it for them.

[ken_ichikawa]

that is, we need to pay them back, just to make amends. So a few lean years for us.

The problem is though you think they will go oh well thats alright then shrug their shoulders and forget about it?

My dad still rants and raves about the 3 unequal treaties from 1842. He rants and raves at the way his forefathers were deported from Liverpool docks whenever they asked for more pay. My Grandad when he was alive would relentlessly complain about the 49ers in the US gold rush.

You reckon they'll forget the uber fraud the western nations have done to them?

[ken_ichikawa]

"everything going in cycles".)

If so we are due a massive massive bloody war with 9 figure casulties then.

[Tired of Waiting]

I think we are a special case, where the West has been running what is basically a scam - goods for IOUs - with no real intention of repaying. We have been living it up. (...)

Oh yes, I fully agree with you there. We've been living on credit, and - worse - just spending, wasting most of it, as opposed to investing, in infrastructure (housing included), transport, (good) education, etc.

But all that was totally our own fault.

I think we have to suffer the hit; that is, we need to pay them back, just to make amends. So a few lean years for us.

Other than that, I'm with you. It's up from here for everybody.

Yes, we'll have to pay a lot of debt.

But if the rest of the world is developing, this will be easier, not harder.

And I know that you know all that already. I am mainly writing for the thread, in general.

Edited March 28, 2011 by Tired of Waiting

[Tired of Waiting]

If so we are due a massive massive bloody war with 9 figure casulties then.

Make trade not war.

The Chinese people and government have also chosen this route.

Don't worry Ken, the world is developing. It is good.

[longtomsilver]

The West does not exploit the East for cheap labour. It is their paymasters who do so on our behalf and these are the people that we fo business with in Chindia/Africa they make our own wealthy elite poor by comparison.

[Krackersdave]

They ceased to buy the cheap sh1t that China now produces when the UK made it, they ceased to buy it when the US made it, they ceased to buy it when the Japanse made it, they even ceased to buy it when the Koreans and Tiwanese made it .. why would the same not happen to China when it gets too expensive? Seriously .. how much cheap tatty sh1t do people in the west actually need!

Problem is that China has a bull by the horns and it can't let go.

It also clearly cannot stay on much longer...

Quote Smith and Richardo if you want... China is a command economy.... there is only ever going to be one outcome.

Edited March 27, 2011 by Krackersdave

[Krackersdave]

I sometimes think you might work for the Chinese government.

That makes two who think this....

[wonderpup]

That is why the "race to the bottom" is a (very silly) myth.

No so- the primary goal of every business is to make as much profit as possible while employing the fewest people on the lowest wages possible- the race to the bottom is a core value of our civilisation. ( It goes under the rubric of 'productivity')

Were the technology available to replace every single one of us with robot labour the logic of the system is to do it- despite the absurdity of removing demand from the system and the consequent social collapse involved.

The end effect of increased pay demands in china will be to accelerate the automation of jobs as this option becomes cost effective.

[mfp123]

No so- the primary goal of every business is to make as much profit as possible while employing the fewest people on the lowest wages possible- the race to the bottom is a core value of our civilisation. ( It goes under the rubric of 'productivity')

Were the technology available to replace every single one of us with robot labour the logic of the system is to do it- despite the absurdity of removing demand from the system and the consequent social collapse involved.

The end effect of increased pay demands in china will be to accelerate the automation of jobs as this option becomes cost effective.

no because if robots could replace all of us, the issue wouldnt be allocating jobs and work, but instead a new system of ownership would be needed, as to how resources are allocated.

working in a job and earning "money" at the moment is currently how we are all allocated our "claim" on resources and services. not having to work just means that we need a different system of how we all "claim" for things.

the point of parliament was to wrestle control from powerful wealthy kings and if the same situation occured, we would simply make new laws and a create new system of ownership.

the fear of having no job isnt the problem of not having to work - its the fact you lose your allocation of what you can "claim" for.

a good example of "getting stuff" without working is retirement and your pension.

theoretically if robots did everything for us, you could create an advanced system of benefits to allocate resources i.e everyone gets what they need without having to lift a finger. what you are allocated would depend on this new style of "benefits" system.

Edited March 27, 2011 by mfp123