as with BA, so with Guangdong

It’s curious how the renewed pressure on China to let the yuan rise and make its exports less competitive comes at just the time when the workers in those enterprises are starting to make something like real money. Obviously, the Chinese working class isn’t Obama’s electorate, though pushing for a raise in the price of imported basic manufactured goods (at least till the companies making them migrate to cheaper climes) doesn’t strike me as a great policy for the American working class either. But it’s odd how, for whatever reason, a half decent working class wage always ends up framed in the context of a problem to be solved, not identified as an outcome to be desired or maintained.

But on the subject of shitty jobs, let's spare a thought for these Chinese graduates.

Comments

[Alex]

Have you thought this through? Chinese goods are not becoming cheaper because wages are going up. Chinese people do not buy more imports if their wages fall. Reducing the trade surplus would be consistent with replacing external demand for Chinese products with internal demand.

In so far as Chinese workers spend money on imports (which are primarily food and fuel, right?) the cheap RMB policy is a form of exploitation.

[jamie]

I don't know the level of personal expenditure on imports, though domestic fuels (heating oil, petrol etc) are subsidised at under market prices. Overall, the point I was trying to make was that just as things have broken in favour of a non-trivial section of the Chinese working classes because of a fortuitous combination of rising demand for exports and shortage of labour, along comes the demand to rectify this "market distortion" by re-pricing the currency. There's also the prospect that letting the Yuan rise will reduce demand for labour, exerting downward pressure on wages and thus cancelling the effect of the rise, leaving everybody back to square one and the factory workers worse off.

[Alex]

just as things have broken in favour of a non-trivial section of the Chinese working classes because of a fortuitous combination of rising demand for exports and shortage of labour, along comes the demand to rectify this "market distortion" by re-pricing the currency

Just as? I recall much complaining about the currency policy back to 2004.

[Nick L]

There's also the prospect that letting the Yuan rise will reduce demand for labour, exerting downward pressure on wages and thus cancelling the effect of the rise, leaving everybody back to square one and the factory workers worse off

This won't happen if China can successfully shift from an export orientated to a more domestically focused economy. Which I thought the 'New Socialist Countryside' policies were supposed to accomplish - but Chinese domestic consumer demand still seems really low by all accounts and inflation is high. I'm not sure why China isn't developing more robust markets focused on domestic consumption. Makes me wonder whether holding down domestic demand is intentional for some reason, maybe because some members of the CCP want to continue to build up market share in global manufactures and acquire foreign technology? But this is guesswork.

[jamie]

I think there's actually a psychological issue here in that Beijing seems almost pathologically attached to having high currency reserves, so it prefers to force people to save whenever possible (for health care, for instance, or education, or for minimum 30% deposits on housing)rather than spend. I know that's a typical Asian developing nation thing but here there almost seems like a Germans and inflation scenario going on.

Pure speculation here, but the decentralisation I mentioned in the post may have something to do with it. China always operated on a subsidiarity principle under the CPC in that everything was always paid for, as much as possible, at the lowest level: the village would pay for the primary school, the enterprise would pay for local housing, the township would pay for the district hospital and so on upwards. Given the state of the overall economy, that meant chronic and widespread undercapitalisation everywhere, perhaps leading under the new dispensation to an obsession with capital formation at every level, such as to undermine attempts like the NSC policy intended to get people spending more. But as I say, that's pure speculation