The Shoe Industry Is Developing In The Winter Of &Nbsp; How Long Can China Maintain Its Status As A "World Factory"?

June 3rd hearing

The latest warning comes from the Boston consulting firm. Its May 5, 2011 report predicts that in the next five years, as the wage gap between the US and China shrinks, people will see that more and more commodities in the US market will be "made in the United States".

By contrast, India will replace China's "world factory" formulation for a long time.

Southeast Asia, Burma, Kampuchea and other Southeast Asian low labor cost countries are also taking advantage of China's recruitment difficulties, and pay close attention to attracting foreign investment.

The rapid rise in wages of manufacturing workers in recent years is gradually changing the base of China's rapid economic growth over the past 30 years - a large number of cheap labor force.

The change of relative resource endowments brings about the pains of pformation. At the same time, it also raises an unavoidable question: how long can China maintain its status as a "world factory"?

"I am not so pessimistic, low-end labor intensive enterprises may be pferred, but the speed and intensity of pfer may be smaller than we think."

Shen Minggao, chief economist of Citibank Greater China, told reporters.

The reality is that in the next few years, China will face the pressure of aging population, the labor force population ratio falling to the top and the wage trend rising.

In the process of rising wage level, whether China's economy can continue to maintain a strong vitality, whether the manufacturing industry can continue to maintain its competitiveness and attractiveness in the world, has two key points. First, whether the labor productivity can be improved synchronously or even faster than the wage growth. Two, is the manufacturing industry rising from the low end of the industrial chain to the high-end?

The answer to this series of questions is also related to whether China can achieve the goal of synchronizing economic growth and resident income growth during the "12th Five-Year" period.

Farewell to low wage Era

"Wages for unskilled workers have been stable for about ten years, which is not normal."

"Every time the price is quoted, the guests curse me.

Once I just quoted, the guest said, you have increased 32% since the beginning of 2010.

Miss Chen, who is responsible for the establishment of two factories in Zhejiang and Ningbo, is deeply helpless about LovelyCreations, a director of the Taiwan toy enterprise.

She told reporters that since last year, wages and raw material costs have increased by more than 30 percentage points. If they do not raise their prices, "what will they pay their salaries and materials?"

This is a global problem.

Shandong Feixian County Dachang Textile Co., Ltd. is facing the same challenge.

Gao Yongjie, the regional manager of the company, told reporters that, because of the rise in wages, more than 10 yuan per meter was added, and the wages were 30% in the price increase. "Young people are not willing to do it. Now only 35 to 45 years old can be able to do it."

Over the past 30 years, a continuous supply of cheap labor is an important driving force for China's rapid economic growth and the cornerstone of the success of the eastern coastal world factory model.

At present, the cornerstone is being eroded.

According to Miss Chen of LovelyCreations, the whole big change began in the late spring and early summer of 2010 in the Foxconn incident.

"The whole situation starts to get out of control, workers have been asking for wage increases". By the end of 2010, when workers renew their labor contracts, workers will calculate themselves according to the local government's wage increase.

The two factories in Ningbo have been put into operation in 1997, so far nearly 15 years.

In 2010, almost all provinces in the country raised the minimum wage.

In the first quarter of this year, 13 provinces increased the minimum wage standard, an average increase of 20.6%.

By the end of 3, the highest monthly minimum wage in Shenzhen was 1320 yuan.

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However, it is impossible to recruit workers only by paying the minimum wage.

Jin Xin, assistant general manager of Dongguan lighting group, told reporters that the increase of 20% of the minimum wage increased to more than eight hours and overtime after holidays. The overtime work during the working day is 1.5 times the minimum wage, the weekend overtime is 2 times, and the statutory holiday is 3 times. "One month, the average salary is 2000 yuan -3000 yuan."

Minimum wage increase

Continuous wage increases cause business difficulties.

A person in charge of Zhejiang AIA integrated ceiling company introduces that there are about five hundred or six hundred integrated ceiling enterprises in Jiaxing. Most of them do not have their own brands and high-end resources. Small businesses are especially passive. "Since last year, there has been news of business failures, and it is estimated that about 10% of enterprises will not be able to go on."

In April 26th, the white paper published by the Chinese Chamber of Commerce in the US in 2011, said that the challenge of rising labor costs and labor shortage has become the top priority of many American enterprises in China.

71% of respondents believe that wage increases cause negative effects or significant damage.

Wages rose by more than 50% in some US funded enterprises in southern China.

The white paper argues that the rise in labour costs and worker turnover has weakened China's ability to maintain rapid economic development and maintain global competitive advantage.

The nationwide rapid wage increase is, to some extent, a compensatory rise in wages over the years, which is lower than the increase in labour productivity.

Nomura's estimates of labour productivity in industrial enterprises show that in 1994 -2008, labor productivity grew by 20.8% annually, while manufacturing wages increased by only 13.2% during the same period.

Meng Kewen, President of the China Chamber of Commerce in the United States, told reporters that wages for unskilled workers had been stable for about ten years, which is not normal.

In the current wage increase, the wage increase of unskilled workers is greater, and the wage gap between skilled workers has been narrowing.

Shen Minggao believes that in the first few years of wage increases, compensatory rises will surely emerge, and the momentum will be stronger.

This trend can be seen from the rapid growth of wage income of rural residents.

In the first quarter of this year, the wage income of farmers increased by 17.9% on the basis of last year's growth rate, increasing by 18.9%.

The increase in consumer prices of daily necessities and services also requires a corresponding increase in the wages of workers.

"Living goods went up badly, and the workers asked me to go around the supermarket and talk about wages."

Miss Chen of LovelyCreations said.

During the "12th Five-Year" period, the Chinese government put forward the goal of "double synchronization", that is, the growth of residents' incomes and economic growth are synchronous, and the growth rate of labor remuneration and labor productivity are synchronous.

According to the world bank data, this means that by 2015, employers in China will have to pay 1 trillion and 500 billion yuan (9 trillion and 800 billion yuan) more for the new labor cost. The continuous increase in wages will increase the share of labor cost to GDP by 1 times, from 15% to 30% in 2015.

Demographic dividend disappears.

The old comparative advantage is gone, and the new comparative advantage has not yet been shown.

Will China do that?

Day by day wages rise, and many enterprises who hoped to survive the cold winter as soon as possible have a slim future.

"Wage increases are not short-term, but long-term changes, the root of which is demographic change."

Meng Kewen, President of China Chamber of Commerce, said.

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In April 28th, the National Bureau of statistics released the data of the sixth national census, confirming the previous researchers' predictions about the decline in population growth and the acceleration of ageing.

Since 2000, the average annual growth rate of population has been 0.57%, 0.5 percentage points lower than that of -2000 in 1990, and the rate of population growth has dropped rapidly.

In fact, the aging of population is faster than expected.

As of November 1, 2010, at the age of 0, the population aged -14 years old accounted for 16.60%, 6.29 percentage points lower than the 2000 census, 13.26% of the population aged 60 and over, 2.93 percentage points higher than that of 2000, of which 65 and above accounted for 8.87%, up 1.91 percentage points from 2000.

According to Ba Shu song, deputy director of the Finance Research Institute of the State Council Development Research Center, the published data confirm that China has crossed the "Lewis turning point" and that the demographic dividend window period is about to close.

The key indicator to analyze the demographic dividend is population dependency ratio, that is, the age of 0-14 years old and the elderly population over 65, who account for the proportion of working age population between 15 and 64 years old.

Since 1970s, China's child dependency ratio has dropped significantly, and the dependency ratio of elderly has slowly increased, and the total dependency ratio has been declining.

This means that more people will enter the labor force and provide sustained impetus for economic development.

However, the situation will be reversed in the next few years.

The latest demographic data show that China's total population dependency ratio is 34%, the child dependency ratio is 22.3%, and the elderly dependency ratio is 11.9%.

Prior to the UN's prediction, by 2015, China's child dependency ratio was 27%, and the elderly dependency ratio was 13%.

It can be seen that the decline rate of child dependency ratio in China has already been faster than that of the United Nations.

Ba believes that the severity of aging and the shortage of reserve labor are far more serious than forecast. It is estimated that the stock of China's labour force will begin to decline before and after 2015, that is, the disappearance of demographic dividend.

Cai Fang, director of the Institute of population and labor economics of the Chinese Academy of Social Sciences, predicted that China's population dependency ratio will reach its lowest point in 2013, then rise, and the demographic dividend will be lost.

Chen Yong, a macro analyst at Huatai Securities, believes that this means that the productivity created by the working age population of the unit needs to be improved continuously to make up for the loss of the age structure of the population.

Cai Fang is worried that China will see "the old comparative advantage is gone, and the new comparative advantage has not yet been shown".

Due to the shortage of labor and rising costs, the traditional labor intensive industries will lose their comparative advantage. China's current per capita GDP is US $4000, which means that capital accumulation is not enough, coupled with limited technological innovation, capital intensive or technology intensive industries have no advantages, so they are faced with the risk of "middle-income trap".

The tight supply and demand of labor force and the rising cost of wages will be China's long-term trend.

Enterprises have already felt the impact of difficult recruitment and rising wages.

The white paper of American enterprises in China says that from leading talent to project managers to skilled skilled workers, China's shortage is even more serious than that of other major Asian countries, which has hindered China's attracting new investment and expanding its business in China.

However, Wang Chin, a macroeconomic analyst at Guotai Junan, believes that the rising dependency ratio does not mean that China's labor age advantage has been lost.

The special age structure of China makes the dependency ratio of China at this stage far below the lowest point of the dependency ratio in Japan or Korea. Even though the dependency ratio is rising in the next five years, the dependency ratio of China is still at a low level.