China experiences growing pains

Posted: February 2, 2011 in China, Economic Development
Tags: , , , , , ,

China’s growth has been ‘the’ economics story of the past decade. Last time I checked, it was projected that China would become the world’s largest economy in 2026 (fifteen years from now … not such a long time really).

200 million people have migrated from rural to urban China to work in the factories powering this miracle. It is the largest migration in human history; significantly more than moved from Europe and Africa to the Americas -and also significantly faster.

Just as quickly, we are beginning to see the next stage of the story.

The global financial crisis brought about job losses. Workers have begun to demand wage rises – successfully. Manufacturing companies such as Yue Yuen, maker of 250 millions pairs of shoes annually, have responded by locating their new operations in even lower cost countries such as India, Indonesia and Bangladesh.

China now has to begin a transition to a service-based economy. In the West this took a century or more; in China it has only taken a few decades.

Update 21/2: I’ve written a new post carrying on this subject

See also

  1. […] worker, minimum wage, Pearl River Delta, Wage, wage growth 0 A couple of weeks ago I wrote this post about increased labour unrest in China caused by a reduction in exports. It seems there is more to […]

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