essay_first_draft_GWY-HC

essay_first_draft_GWY-HC - CAES1904GeWenyangRichard...

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CAES1904 Ge Wenyang Richard 2010802377 1 The World’s Workshop: Time to Declare Independence from Cheap Labor? Introduction Using cheap labor, China rose as the world’s leading exporter especially in labor-intensive industries. Benefiting from the exports, China’s economy enjoyed a substantial growth over the three decades and overtook Japan as the second largest economy in the world. Despite the economic boom, however, China still remains poor in per capita term and poverty for low paid Chinese workers has even increased during this time. It is therefore worth reconsidering China’s labor-based development model and decide whether to reduce reliance on cheap labor. This essay will provide an introduction of the increased inequality under the current model, followed by an analysis of its sustainability from the perspective of demographic transition in the labor market. In the end, the essay will also indicate opportunities China has in designing its future development plan. Mounting Unrest and Descending Supply Under the current model, inequality in income distribution rose sharply and offset much of the positive effect the rising economy had on standard of living. While China’s economy performed well overall, Chinese workers are getting a smaller slice of the development cake. The wage proportion in the country’s GDP has been decreasing for 22 years: 36.7% in 2005, down from 56.5% in 1983 (Zhu, 2010). Low wages not only kept the workers “eating bitterness”, as the
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This note was uploaded on 06/09/2011 for the course ECON econ 1001 taught by Professor Wong during the Fall '09 term at HKU.

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essay_first_draft_GWY-HC - CAES1904GeWenyangRichard...

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