The featured article on Economist is about the rising power of the Chinese worker. Indeed. A long waited increase in Chinese workers salaries will have many good implications for China itself and the rest of the world. This article analyzes some of these benefits. In addition to the mentioned benefits in the article, which I summarize briefly bellow, there is one more.
This is that an increase in Chinese workers salaries will improve the competitiveness of other countries, like the Europe’s south, who now suffer, from the abundance of cheap labor in motherland China. In sort, the benefits from increasing China’s labor costs are:
- Increase the ability for the Chinese workers to enjoy the fruits of their labor.
- Balance the Chinese economy which is currently heavily depended upon investment.
- Boost the world economy, by increasing consumption.
- Balance the China’s trade imbalances with the rest of the world.
- Adjustment in the Juan’s exchange rate.
- Increase the employment in the rest of the world, as less jobs from the other countries are going to be lost to China.
- Improve the competitiveness of other countries.
The main cost from this increase, will be the increase in the price of Chinese products, but this is counterbalanced with all the above benefits, especially that of increasing employment in other countries, and also the fact that at this time a little inflation is not bad. The ones who may lose more form this rise, is going to be the shareholders of the big corporations who have factories in China.
