Economics in China is changing rapidly. With this change comes major concerns about how to sustain the growth that China has enjoyed in recent years. This article mentioned one concern in particular of rising labor costs. Cheap labor is not coming quite as cheap as it used to, with about 20% increases in wages coming every year. If this rate sustains through 2015 the lower costs that American companies enjoy from manufacturing in China and then shipping to America will be all but completely diminished.
I found this article interesting because it is another reminder that this economic powerhouse still has some major obstacles to overcome. Incredible growth rates bring their own problems of sustainability and businesses are forced to continually adapt.
http://www.economist.com/node/21549956
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ReplyDeleteI think that the obstacle of the Chinese labor market is significant and will create some more healthy international competition. It may even prompt the Chinese government to continue adapting its foreign and economic policy, which would be a positive. Another positive is that it may prompt companies to invest in other countries with cheap labor, which will strengthen their economies and consequently the global economy as well. This is similar to what happened in India. A major concern for Americans on this issue though is that if China begins losing investors due to a more expensive labor force it might decrease its level of investment in the US because less money is coming into the country.
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