FT article and editorial on the recent spate of Western companies giving into local Chinese labor demands for higher wages. The FT says “Chinese workers are now in revolt”!
Believe it or not, but these are the next-best set of problems for both China and the global economy.
As the FT editorial argues: “Higher wages are a goal of successful development.”
These wage hikes are just the beginning; the Chinese labor force is starting to understand its own power in this ongoing struggle. The FT editorial says:
The remarkably low share of wages and salaries in GDP makes China the most “capitalist” large economy in history.
What will Chinese and Western firms do? They will be forced to move ever inland—a self-limiting prospect in terms of profit (longer overland transpo costs), and yet, this is the best possible trend for China itself—the harmonization of development coastal-versus-inland.
Then there’s the larger reality that the numbers of youth entering the workforce will slowly decline over the long-term, raising their bargaining power ever more.
Doesn’t mean China declines rapidly as a manufacturing power. It just means this playing field evens out progressively over time.
All good stuff that shows how China pays the globalization “price” just as much or more than the world suffers the “China price.”
Nothing magical about China’s state capitalism; the same leveling market dynamics work their wonderful magic here as anywhere else.