Forget the old question, “How do you keep them down on the farm?” China has been aggressively destroying its agriculture sector and evicting farmers making it more dependent on foreign imports– one reason we still have something to sell to China.
The real question may be how to keep them working in the factories.
Young Chinese workers don’t want to work in factories anymore. Terry Gou, founder and Chief executive of Foxconn, China’s largest private employer and one of the manufacturers for the iPhone and iPad, claims that Chinese millennials aspire to more than the low-wage, mundane factory jobs which were held by so many in the previous generation and which spurred China’s decades-long economic boom. Gau is now worried that the company will soon be unable to fill the low-wage factory positions that have been the bread and butter of employment in China for years.
I wouldn’t take this too seriously.
China does not really have a shortage of people willing to work at low-wage factory jobs. It has a large enough population and a lot of displaced country folk if push comes to shove.
But the problem may kick in with skilled labor. China finds itself at the point where it needs skilled labor, but isn’t willing to pay for it. It also faces an expanding middle class that is becoming westernized and consumerist.
Taken to its logical extreme, China would end up with an American economy with a 1 percent knowledge worker sector buying products made somewhere else by its factory bosses, a large service economy and a lot of unemployed ex-factory workers.
That isn’t too likely to happen, but what Gou may really be signaling is that Chinese companies (Foxconn is Taiwanese) are exploring other options.
While Foxconn has been lobbying the government for tax and other incentives, as it has typically received when expanding both within China and elsewhere abroad, Indonesian officials have been pushing the company to invest in research and technology to ensure Foxconn does not just open in Indonesia to take advantage of wages that are as much as 50 per cent cheaper than in China.
If you want somewhere cheaper to do business, there always is someplace else to go. Gou has no allegiance to China. But Chinese bosses, many of whom are sending their kids off to America, often don’t seem to have much allegiance to China either. The Communist/Post-Communist system in China is every bit as corrupt as its Russian counterpart. The higher ups dress up the whole thing in nationalism and saber rattling, but the elite live abroad as much as they do at home, much like our own elites.
China’s rising wages and its expanding middle class may mean that Chinese bosses will end up doing to China what their American counterparts did to America. Even if they have eager employees in a line stretching out the door (and they do), the rush will begin to find someplace cheaper and unexploited to do business, whether it’s in Indonesia or its growing Chinese industrial colonies in Africa.