From Overseas Press

China follows Asian Tigers' path

(chinadaily.com.cn)
Updated: 2010-06-11 14:48

China is "losing abundant cheap labor," its "biggest advantage as a manufacturing export base," because of increasing wages and currency movements, said an analysis in the Financial Times on June 9.

According to the article, a preliminary study has shown that last year, "China was surpassed as the world's lowest-cost components manufacturer by both India and Mexico."

The country "is trying to move up the value chain as its citizens get richer," just as Japan and the Asian Tiger economies did before. But workers' wages will "accelerate at a faster pace than many companies can climb the technology ladder," said the article.

China's income gap between urban and rural areas last year became the widest since modern records began in 1978. The country is researching ways to deal with the urgent situation and "has made the issue a top priority for its 12th five-year economic plan," revealed the article.

The article said the government has worked to "raise minimum wages across most of the main manufacturing centers so far this year."

Wages are on the rise throughout the East Asian region, with China at the forefront. On the one hand, these governments hope the raises will "reduce increasing inequality," but on the other hand, they fear it will "harm competitiveness in the globalized economy," concluded the article.