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With increasing wages in China many things change: the lure of offshorisation fades, Chinese domestic demand (suppressed so far) will increase, and the Chinese themselves are going to ask for better environmental and work standards. This will translate into more demand for Western workers, and thus an end to labor cost erosion - and to living standards stagnation;
I've read that there's plenty of scope for companies to seek out cheaper labour within China. Wages in major cities and export-oriented regions like Guangdong are high by Chinese standards, so companies are beginning to move to inland provinces where wages are lower. In particular, 'dirty' industries are migrating to poor provinces where officials will turn a blind eye to pollution in return for jobs.
by Gag Halfrunt on Sun Aug 22nd, 2010 at 06:44:56 PM EST
True enough, but there's been a reason why all the industry development has been in the coastal regions -- with associated population migration--, rather than in the hinterland: transport; most of the goods from China are shipped from ports like Shanghai or Guangzhou.

Cheap products and razor thin margins do not leave space for expensive transport costs. The infrastructures in the Eastern and Northeastern regions are not up to the task either. So yes, there are resource limitations here too.

by Bernard on Mon Aug 23rd, 2010 at 04:52:10 PM EST
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Give it another 15 years and they'll have run out of poor inland Chinese as well. Then only Africa is left.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Aug 24th, 2010 at 10:45:08 AM EST
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