Expert: China still has edge in low-cost labor

17:08, June 28, 2010      

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China's labor force costs remain competitive worldwide, said Niu Wenyuan, chief scientist of the Chinese Academy of Sciences.

Niu has analyzed the transition of China's economic development mode and population migration patterns.

He said the short-term decrease in labor force demands of eastern China due to the global financial crisis had no impact on the direction and intensity of China's population flow over the last year.

Niu said in his research report that currently the labor cost indices of United States, Japan, Hong Kong, South Africa, South Korea and India are 3.1, 3.0, 2.9, 2.6, 2.2 and 1.3, respectively, in comparison to China's labor cost index of 1.0.

Niu said though some developed eastern regions of China show a tendency for labor shortages, there is no probability that China’s economy in the next 10 years will hit the Lewis Turning Point, which refers to the stage of development where surplus labor from the countryside runs out and wages increase.

He said China has a vast territory, a large proportion of primary industry population and ample room for industrial transfer. Therefore, China's demographic dividend still has great potential.

The report also shows that currently there are total 210 million rural laborers in China, of which 90 million rural migrant labors already live in cities and towns.

It is reported that 65 percent of the transient population has flowed into eastern China, 30 percent into central parts and 5 percent into western regions.

It is also reported that rural migrant laborers constitute 80 percent of national farmer incomes.

The nurturing role for the countryside, agriculture and families has become an important factor for narrowing the income gap and promoting wealth in rural areas.

Niu argues that the adjustment of income distribution significantly increased payments for laborers, thus making the "social dependency ratio" gradually transform from simply calculating in accordance with the proportion of dependants to calculating both in accordance with the population and the number of dependants.

Liu said it can be expected that China's first demographic dividend is still available.

By People's Daily Online


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