Comments on: China hits a welcome turning point

By: doctorjay317

doctorjay317 — Fri, 18 Jun 2010 02:24:17 +0000

“Yes wages there do need to rise but when they do, watch the flood of companies relocating back to the West when wages for the lowest paid worker reach parity with the same workers in the West.”

This will never happen. At most, it will dilute the extremes. Parity? Never. It’s not just about economics. It’s about work ethics as well. And this will never change.

By: twiceshea

twiceshea — Thu, 17 Jun 2010 20:24:07 +0000

I think it depends on how much freedom it is willing to give up to the people. My own thought is probably not much and I expect the yuan to stay strong, so I think China is just making more troubles for itself in the future.

By: SurajZ

SurajZ — Thu, 17 Jun 2010 18:43:34 +0000

There are still billions of workers who are ready to fill the Chinese and Indian workers shoes. This division of labour, as envisioned by Adam Smith, will continue until a 16 year old from England and a 16 year old from India and China, with no qualifications or experience, will command a similar wage.

This division of labour will find increasing equilibrium in qualified jobs as well. Its good for the world. The West as we know it will lose its power and propensity to bully. Less people will be killed needlessly and less hatred.

By: battersea2

battersea2 — Thu, 17 Jun 2010 17:13:15 +0000

Hi James
Thanks for your articles I have frequently learned from and enjoyed them .
Re current article having spent most of the last 8 years in China I feel you underestimate the complexity of the society .
I would completely agree with your views if Shanghai could be regarded as typical[which it is not] however in my experience the disparity between areas like Shanghai should not be underestimated [yes an office worker in Shanghai may be earning 5000-7000 RMB ,750-1000ish USD per month] and be aspiring to home ownership and the trimmings ,+ car and holidays etc etc . The average person in most of the regions [ Laioning, Herbei, Jiangzu , Zehjiang, Shandong, Shanxi etc etc]I know , the average is closer to 500 – 1000 RMB [75 -150 USD] per month ,given that most are raising families and paying in full for health care and children’s education ,it’s hard , and the US’s problems are a matter of indifference.
Yes they aspire to home ownership too ,and the costs are relative ,but like here in London the gap between the have and have nots is widening . The aspiration remains and will remain a dream ;Remember there is fine line between a dream and dissolution , and between dissolution and unrest!
For me this fact is the flaw in your argument.
As far as I can see the Chinese government’s greatest concern is to maintain social stability and it’s eyes are constantly on the interior where traditionally social disruption comes from . I can see no substantial move to accommodate super rich countries like the US until people in the interior are at least within sight at least, of places like Shanghai .
Even in Shanghai ,in April, when I was last there , people were grumbling about disparities between the rich and the poor and rising prices. I know people in the provinces are finding it really hard . your benign scenario with just the Chinese suffering a bubble to everybody else’s advantage is a wish fantasy .
It won’t happen unless it is clearly to local advantage ,the rich there can already afford the Benz and the other status symbols. Who would benefit from Yuan appreciation ? Not the masses as you suggest but the rich who already can easily afford these toys . they will just get richer and in my view the tensions will increase .
Jiang Zemin chose to ape the US model yes , but, Hu Jintao has chosen to row back from that position , the last couple of years of funny money and political instability or impotence has done nothing to convince the people on the street let alone the political elite that the western system is stable . All the people in China now in power were brought up on
Karl Marx ” Capitalism contains within itself the seeds of it’s own destruction ”
Have we shown that this is not true ?
For a progressive agreement on how to manage the world economy there has to be trust , the level of corporate fraud and economic instability in the “developed” economies ,notably the US ,have in my view only confirmed the Chinese suspicions that we [the west] are not to be trusted .
The more the US bullies the harder it will be unless there is a deal e.g. a Chinese company taking over Boeing or similar and there is a regulatory hurdle that a Yuan adjustment would smooth .
Apart from this I suggest that China will pursue it’s own self interest just as hard as the US feels entitled to do all the time .
At this moment I suggest that we all work to make the necessary adjustment to our own system ,primarily by eliminating the ease with which the gigantic frauds from our system have been carried out , the fear of which are after all are the things that make the Chinese seem rich when clearly they are not. To do this we have to accept our own failings and not try and shift the blame or the solution to others outside our very privileged world .We need political dynamism not a vacuous managerial style based on blame as we are now all suffering.
If 1/3 of the worlds population represented 1/3 of the world’s economy would that be so imbalanced ?
If the US produced 1.5 tonnes [per head as China] of CO2 per head not 20 tonnes as now would that be such an unreasonably thing ? or even 10 tonnes as Europe ?
If US defense spending was halved to 24% of global totals it would still spend 3 times more than China [and given relative populations that is still 12 times as much per head]would that be such a bad thing ?
Just these 3 statistics show that a significant realignment is inevitable , but is 30 years of resistance and 30 years of arrogant exploitation albeit that we now realise we have been outwitted a good place to start the building of trust ?
At a time when we need their help too !
You judge !
For what it is worth
Dermot

By: haass

haass — Thu, 17 Jun 2010 16:57:10 +0000

http://www.raxanreeb.com

By: haass

haass — Thu, 17 Jun 2010 16:56:03 +0000

i think they should overthrow the government they have the number. i think dictatorship will never bring anygood. power to the people

By: AdamSmith

AdamSmith — Thu, 17 Jun 2010 16:13:44 +0000

Excellent article. Workers of the world, unite.

By: Benny_Acosta

Benny_Acosta — Thu, 17 Jun 2010 16:11:10 +0000

It seems that the people of China have begun to realize their value to their nation and want to be adequately compensated for their efforts. It’s about time. They were being worked like slaves in the past. Now that China is growing its people should be able to enjoy a better standard of living. It’s only right since they’ve been working in sweat shop conditions for decades now.

With increased income comes increased access to the world around them. Maybe now the Chinese will truly become members of the global community.

By: MagAodh

MagAodh — Thu, 17 Jun 2010 15:06:07 +0000

Yet another article touting how successful China is. Yes wages there do need to rise but when they do, watch the flood of companies relocating back to the West when wages for the lowest paid worker reach parity with the same workers in the West.

Only multinational companies profited from the wage imabalance as western workers couldn’t compete with people who could be paid a fraction of what we were paid.

By: sdf

sdf — Thu, 17 Jun 2010 14:19:58 +0000

Dear James,

Thank you for the article, all good thoughts on the topic.

I think global trade will be greatly enhanced when wage/labor normalisation occurs in China as a manufacturing center throughout world history as a massive boon to China’s Economy aiding their internal growth in standards of living and competetion in the global economy as not only a consumer of unrefined commodity product(s) but an increasing share of technically manufactured products.

It is important to note that this could result in a decline in historic western technological dominance and a rebalancing of global trade as suggested and once witnessed after a brief period of western industrial dominance during the post-classical period.

However as with the western short-term dominance of the post-classical period, emergent automated technological manufacturing capabilities in Japan and assimilation of more perfect perceptions of automation within production machines (“Robots”) would also work to re-normalize global trade imbalances and increase demand for high-productivity/pay enhancing knowledge workers.

They entering into wage/labor pro-rata parity, assuming saticfaction of fuel demands innovations, should provide a global rise in trade, particularly in technical ideas (“INTELLECTUAL PROPERTY PRODUCTS”)advancing human society on the whole.

We can only hope that recognizing this slow incremental change in China’s more broad power in the global economy will provide for an increase in compensation for global knowledge workers and by productive mutual agreements open information markets.

Navigating the multiple complexities and nuances of these changes is a principal challenge to global economic diplomacy and international economic policy.

or something expanded to that effect.

Our Old Problems in the Modern Era.