From Overseas Press

The end of cheap labor in China

(chinadaily.com.cn)
Updated: 2011-06-22 16:12

As wages rise steadily in China, a fresh wave of export manufacturers, big and small, are now choosing to move away from China, and the era when the nation's cheap labor is so abundant may well be over, according to an article published on Time.com on June 20.

In a land that is supposed to provide unlimited cheap labor - a nation with a 1.3 billion population and whose extraordinary 20-year economic rise has been built first and foremost on low-paid workers - "the game has changed," says the article.

In the past decade, real wages for manufacturing workers in China have grown nearly 12% per year, says Helen Qiao, chief economist for Goldman Sachs in Hong Kong. "That's the result of an economy that's been growing by double digits annually for two decades, fueled domestically by a frenzied infrastructure and housing build-out," according to the article, before it goes on to add that the hike in the minimum wage, about 14% to 21%, in the nation's five largest manufacturing provinces, is also an important factor.

Although the average manufacturing wage in China is still substantially lower than in developed countries - only about $3.10 an hour compared with $22.30 in the US - its rapid increase will actually benefit both the rich and poor world, the article says.

For one thing, "countries like Cambodia, Laos, India and Vietnam are picking up some of the cheapest labor manufacturing left by the Chinese," says the article, which will surely help their economic development in the long run. More significant, higher wages mean that average Chinese will have more money in their pockets and their increased consumption is just what Beijing's major trading partners urgently needs to redress trade imbalances.