China’s Grand Experiment Finally Hits the Buffers

Posted: May 7, 2011 in China, Economic Development
Tags: , , , , ,

In January 1984 then-premier of China Deng Xiaoping toured a sleepy village in the country’s Southeast called Shenzhen. He had some changes in mind.

Today the province is the most prodigious manufacturing area in the world. I’ve put together a video clip to give a sense of the scale of it:

The Pearl River Delta is the answer to the question, What if we were to just continue to grow indefinitely? What are the limits to growth?

Will you eventually end up producing more goods than people can buy? Once you make a ballpoint pen for every man, woman and child on the planet, that’s it right? Well apparently not. China makes 85 billion ballpoint pens a year; 12 a year for everyone on earth. No problem there.

Uniquely, the workers haven’t risen up. The state controlled unions keep their demands in check.

The end of the affair seems to be coming about because of rising prosperity coupled with labour mobility. In two separate articles this week, BusinessWeek reports that other parts of China now look much more attractive for new factories and that, as China closes the wages gap on the rich world, manufacturers may start calculating that it’s not worth their while to relocate at all. Foxconn, the iPad/iPhone manufacturer has been leading the charge, moving to set up operations in Turkey, Slovakia and Brazil.

Will we ever again see so much produced in one small place? Well never say never but it’s hard to imagine.

The struggle for better working conditions is far from being over in the Pearl River Delta, but its share of the world’s low-paid workforce has begun a long decline.

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Comments
  1. […] As the wages of the workers of Guangdong increase, the companies sourcing their products are simply moving on to lower cost countries, or even lower cost regions still inside China: Vietnam, Cambodia, Bangladesh (no doubt Burma will […]

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