China NK Economics

NYT: Labor Grows Scarce in China

It may be one of the more significant trends we’ve seen in China — there is no longer enough cheap labor for every factory to continue to run on a low-tech, low-wage, labor-intensive basis. The result is that factories are now paying better wages and improving working conditions. It’s also causing some foreign investors to consider other countries where labor is cheaper and more plentiful.

Could this mean that China’s manufacturing boom is topping out?

I’m no economist, but I wonder how that trend will intersect with what some believe to be China’s marginally insolvent banking system and the Great Demographic Wall it will hit when the last pre-one-child generation hits retirement age. If rising wages throw the Chinese economy into an inflationary cycle, drive out investors, and lead to plant closings, how will it affect rising political unrest?


  1. I find it hard to believe that China, with a population near or over 1 billion, with most of its population still living at or below the poverty level, that they are running out of cheap labor. I suspect the location of the labor is the issue, and perhaps to some degree a growing conscience about how laborers are treated. But even if they are deciding to pay people more, the disparity between most of China and the US wages remains huge.



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