The Phaserl


The Hollowing Out Of Chinese Manufacturing

by Wolf Richter, Testosterone

The great American manufacturing renaissance? Maybe not. But China is losing the low-wage edge. With manufacturing already in the doldrums, dizzying wage increases, long a reality on the factory floor, have become government policy last fall: the new leadership of the Communist Party wants disposable per-capita income to double by 2020.

Regional governments, authorized to set their own minimum wages, responded. In April, Shanghai raised its minimum wage by 12% to 1,620 yuan ($260) per month, the fourth year in a row of steep increases. Shenzhen raised it to 1,600 yuan. In 2012, minimum wages were boosted in 23 provinces and large cities. So far this year, 14 provinces and cities have already made the move. Wages above minimum have jumped as well.

In the Pearl River Delta, overall manufacturing wages jumped 9.2% this year, up from last year’s 7.6% increase, according to the annual survey by Standard Chartered. Three quarters of the companies expect wages to rise 10% over the next 12 months. And an analysis by the Japanese business daily Nikkei determined that China now has the highest per-capita labor costs among emerging Asian countries, after they climbed 60% from 2009 through 2012!

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2 comments to The Hollowing Out Of Chinese Manufacturing

  • Sergio

    Looks like a caged chicken farm.

  • NaySayer

    Wow. A 9% raise? Please, that means nothing. When workers are getting .58 cents an hour in china then even a 10% raise means they are now getting .64 cents an hour.

    Who are they going to find to work for less than .64 cents an hour except slave labor and american private prison workers?

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