A Reply to ＜For Foreign Makers, China's Low-Cost Image Fades＞

The article is about the economic condition which Chinese labors and capitalists in China are facing now. Recently, lots of capitalists reconsider the issue whether China is an appropriate country for large investments or not. In the earlier decades, the flow of Chinese workers from the countryside pushed factory labor costs down. However, workers in China are demanding higher wages and better jobs now. Take manufacturing wages for example, it have begun rising dramatically since last year. In 2009, the worker’s average wages a year is about 27,000 yuan ($4,200). Some of specialists predicted that it is likely to double by 2015 from current levels. Rapidly rising wages in China have reached the point at which foreign manufacturers need to give up on the notion of the country as a low-cost production base.

Despite of the surging manufacturing wages, China still offers other draws, such as strong economic growth, an increasingly affluent population and a great demand of goods. Although setting up the factories in China seems like an inevitable trend, the reasons of the dramatic increasing rate of wages should also be figured out.

After reading this article and some relating resources, I have a brief view on nowadays working condition in China. The dramatic increase in wages sounds like a good news to the workers. However, in a growing country with large population like China, Brazil, India, etc., any huge changes among economic or politic should be avoid. It seems like China has a pain due to sharp economic growth, I guess it’s time for China to fix these problems by currency manipulation. As a main controller of a country’s finance, every step central bank takes are important. When making any decision, the decision-maker should listen to comments and suggestions from every aspect and make the best choice which can maximizes everyone’s profit. When making a change, I think the most important thing is gradually. Making a huge change suddenly is very dangerous. I hope the PBOC can “gradually” guide monetary conditions back to more normal levels in the next stage of policy oversight. It is also a good way to practice economic revolution and manipulate market.

Another possible solution I thought is to encourage large enterprise setting their factories in the medium cities in China. Not only labor wages, everything is extremely expensive in Beijing, Shanghai, Guangzhou, etc. Big cities are getting more and more expensive, but there is still a vast major of population in China living a very low cost life. What we should do is to enhance region development, not cost down the cost of human resources. I don’t agree with the author’s saying "the low cost image fades". As the economy grows, the workers are worth to have higher wages. Manufacturing in China is about value, not low cost. There were many places offer lower costs, but they were not considered good manufacturing bases. China has its own strong points and it still makes sense for a lot of enterprises to keep putting resources in China with growing wages, as wages is not the biggest part of the cost structure. When the coastal region gets more expensive, it also means that there is a growing customer base for the big companies.

Making economic condition in China more stable is not only China Government’s business. Although lots of analysts warned that there is no winning with China when doing International marketing, lots of investors still keep putting capital into China. Because China is such an important export country and manufacturing base, every step its government takes means a lot. For example, the tighter policy the government took in 2010 winter made exports more expensive thus hurting China's GDP. Its economy shrunk because availability of goods for export reduce, which means Chinese trade surplus were lower and other country’s trade deficit also reduced. China plays an important role in the worldwide economy.