International Law

China Wage Increases. Slowing Just A Bit.

By Dan

Tom Orlick of the Wall Street Journal has an article entitled, "Exporters' Gain Is Workers' Loss in China's Labor," focusing on China wage rates. Though wages are definitely still rising, they are rising at 9% to 15%, not the 20% to 30% many had predicted. Orlick describes these lower than expected wage increases as "a short-term blessing and a long-term curse:

For now, it means a smaller contribution to inflationary pressure and contains costs for exporters, already facing a squeeze from yuan appreciation and pricey raw materials. Textile producers are absorbing a 150% rise in cotton prices over a year.

Longer term, exporters' gains are workers' losses. Tepid wage increases will do little to put more money in workers' pockets or fulfill Beijing's aim of rebalancing from foreign to domestic demand.

What do you think?  

Full post as published by China Law Blog on March 31, 2011 (boomark / email).