Made (expensively) in China

Reason to cheer: More reports of a Chinese labor crunch.

Published March 20, 2006 7:12PM (EST)

The Sinoblogosphere is buzzing today with commentary on a BusinessWeek article about rising labor costs in China. My favorite tidbit from the article was a quote from the author of a January report by the American Chamber of Commerce in China: "'China runs the risk of losing its advantage' of cheap labor, says Teresa Woodland, an author of the report."

How awful! I'm sure workers everywhere, from Shanghai to Detroit, are equally desolate at the prospect of a Chinese labor shortage. Just kidding -- as the New Economist notes, it's "good news for globalization" when wages in China rise. A tight labor market there will eventually ease pressure on workers everywhere.

Or will it? We've discussed the phenomenon of rising wages in India and China here before, and readers have been quick to argue that multinational corporations will respond to labor crunches there by simply moving elsewhere, to Eastern Europe or Southeast Asia or even Africa.

Personally, I think a rush to exploit African labor would be one of the best things that could happen to that benighted continent. And yes, corporations are already moving resources from China to Vietnam -- the search for cheaper costs is inexorable. But it's also worth noting that a fundamental change in the global economy in the last two decades -- the relatively sudden addition of billions of workers to the global labor pool -- is a historical phenomenon the like of which we will never see again.

The end of the Cold War, the debut of high-bandwidth global Internet connectivity, and the opening of China and India to the world market effectively doubled the global workforce. That fact has put workers in the developed world on the defensive. But it won't be repeated. Will the world adjust to this transition without breaking up into feuding trade blocs or worse? There's no answering that question at this point. But even if all that labor shortages in Shanghai or Guangdong achieve is to push foreign investment and factory employment into the rural inland of China, that's still a good thing, if you care about rising income inequality in China as much as you care about it in the U.S.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

MORE FROM Andrew Leonard

Related Topics ------------------------------------------

China Globalization How The World Works Unemployment