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The End of Cheap China

The End of Cheap China | Geography Education | Scoop.it
TRAVEL by ferry from Hong Kong to Shenzhen, in one of the regions that makes China the workshop of the world, and an enormous billboard greets you: “Time is Money, Efficiency is Life”.

 

China’s economic growth has been explosive. Many people predicting the economic future have used current growth percentages and trajectories to extrapolate into the future. The question that we should ask is: how long can China continue to grow at this current pace? Many signs are pointing to the difficulty that China will have in sustaining these levels of growth. The era of China being the world’s go-to source for cheap manufacturing is dependent on current geographic variables, variables that the economic growth is altering.

 

Manufacturing prices are rising, especially in the coastal provinces where factories have usually been agglomerated (also known as Special Economic Zones --SEZs). The more success that China has in manufacturing, land prices will go up, environmental and safety standards will increase. Collectively, this will mean that labor costs for the factories will also be increasing as Chinese workers are not only producing but also becoming consumers of manufactured goods with an increased standard of living. This is changing the spatial patterns of employment in China and will impact Chinese manufacturing’s global influence. Sarah Bednarz recommends this article as “a needed update on the new international division of labor (NIDL).”  For more on the topic, see Shaun Rein's book, "The End of Cheap China: Economic and Cultural Trends that will Disrupt the World."

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Don Brown Jr's comment, July 26, 2012 8:57 PM
The variables that are effecting Chinas economic growth will continue to alter its economy and cause it to adapt. How successful China is in resolving this issue may be the difference between the Chinese coast turning into a potential rust belt, the next Silicon Valley or something in-between in the future.
Roland Trudeau Jr.'s comment, July 29, 2012 10:48 AM
As these laws increase and so does the economy it would seem more work will be pushed out of China. Perhaps in the future China will not be the go-to place for cheep labor. That is excellent news for all those effected by these horrible conditions, but given the loss of jobs with the rise of standards, they may not be so happy.
Jacob Crowell's curator insight, December 15, 1:30 PM

I think this is a very important article. All our estimates on China's growth assume that they will continue to operate the same as they grow more and more. We can see that when economies grow, the standards of living rise,, wages rise, the middle class grows and the cost of production will rise. In the late 19th and early 20th century the United States had cheap labor and was one of the worlds leading producer of goods, but as workers clamored for more money, better working conditions and social programs our cost of producing rose to a point where it was cheaper to outsource labor. With China growing, other countries are more attractive to business looking to protect their bottom line.

Geography Education
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