>From Jim Devine... >One way the Chinese government might help raise pay would be to >increase the value of the renminbi, said Nicholas Lardy, who studies >the Chinese economy as a senior fellow at the Peterson Institute for >International Economics in Washington.
>[it's interesting how this article's prescription fits so well with >the US policy elite's goals of raising the renminbi.] I might add that I was Lardy's host here in lieu of my Director who was in Asia then! I have to say his lecture was very well attended by students and businesses. But what I don't understand, how does raising the renminby raise Chinese wages in renminby. Cheers, Anthony On Wed, Jan 20, 2010 at 6:22 PM, Jim Devine <[email protected]> wrote: > The New York Times / January 20, 2010 > > Letter from China > China Could Learn From Henry Ford > By MICHAEL FORSYTHE > > BEIJING — “Little” Xie says he wants to own one of the vehicles he > helps build at the Ford assembly plant in the Yangtze River city of > Chongqing. With his mortgage payment taking about 60 percent of his > 2,000 renminbi monthly pay, that won’t happen soon. > > “It isn’t even worth talking about company incentives to help buy a > car, since I can’t afford one in the first place,” said Xie, 28, a > six-year Ford employee, as he approached the factory gates for his > night shift. Xie, whose nickname comes from his youthful age, asked > that his full name not be used. > > Higher wages for people like Xie would help resolve China’s biggest > economic challenge: shifting away from growth fueled by exports and > investment and moving toward an economy driven more by domestic > consumers. China’s Communist leaders might learn a lesson about how to > create a more prosperous working class from the American industrialist > Henry Ford. > > The founder of the auto manufacturer that bears his name generated > headlines around the world in January 1914 by doubling the average > autoworker’s pay to $5 a day. The move made Ford’s Model T more > affordable, created a more stable work force and helped stoke the > growth of the U.S. middle class, according to Bob Kreipke, the > historian for the company, based in Dearborn, Michigan. > > “This allowed people to increase their buying power and, at the same > time, they produced a better product,” Mr. Kreipke said. > > [but that was not Ford's purpose. Rather, he wanted to reduce > turnover. If his goal had been to raise workers' purchasing power, he > would have supported unionization.] > > Low wages in the world’s third-largest economy are slowing the rise of > a consumer culture that Premier Wen Jiabao and President Hu Jintao > have said China needs to maintain expansion at the 8 percent a year > that will generate jobs for its 1.3 billion people. The current growth > pattern is “unsustainable,” Mr. Wen said Dec. 27. > > That hasn’t stopped China’s auto industry from booming, with sales > last year of 13.6 million vehicles, eclipsing the United States as the > world’s top market for the first time, according to figures from the > China Association of Automobile Manufacturers in Beijing. The surge in > purchases was driven partly by government subsidies to help farmers > buy vehicles. > > Encouraging higher pay might help sustain the boom and bolster > consumption, which currently accounts for about 35 percent of China’s > gross domestic product, compared with 70 percent in the United States. > It would also help ease income gaps between the rich and poor, which > are greater than those in South Korea and Taiwan at similar stages of > development and have led to riots and other labor unrest. > > Ford’s $5 daily pay allowed an employee to buy a Model T that cost > $440 with the equivalent of about four months of wages. [of course, > they could have bought other things instead, which is why Ford wasn't > raising wages to sell cars.] Chinese factory workers averaged 24,192 > renminbi, or $3,544, a year in 2008, according to figures from the > National Bureau of Statistics in Beijing, so it would take more than > three years of wages for them to afford the cheapest car advertised on > the company’s Chinese-language Web site: a four-door hatchback with a > 1.3 liter engine listed for 78,900 renminbi. > > [do we really want China to engage in "automobilization," with all of > the negative effects on the environment?] > > While the auto company declined to comment on worker pay, Ellen > Hughes-Cromwick, Ford’s chief economist, said Ford was projecting > growth 10 years into the future for the countries where it operates, > and it saw China’s economy in a period of expansion characterized by > rapid rises in employee compensation similar to South Korea’s economy > starting in the 1960s. > > “We are at a situation where wages are moving up and doubling in a > very short period of time,” Ms. Hughes-Cromwick said in a telephone > interview from Dearborn. “We do expect takeoff to generate pretty > substantial wage gains.” > > One way the Chinese government might help raise pay would be to > increase the value of the renminbi, said Nicholas Lardy, who studies > the Chinese economy as a senior fellow at the Peterson Institute for > International Economics in Washington. > > [it's interesting how this article's prescription fits so well with > the US policy elite's goals of raising the renminbi.] > > U.S. and European officials have said that China keeps the renminbi > artificially low to improve sales in foreign markets. An undervalued > currency encourages manufactured exports at the expense of developing > the more labor-intensive service sector, depressing job growth and > keeping wages low, Mr. Lardy said. > > “Appreciation would lead to more rapid growth in the demand for labor > and thus to more employment growth and more wage growth,” he said. > > China should also spend more on education for peasants and migrants to > raise their skill levels and employment prospects, said Xiao Geng, > director of the Brookings-Tsinghua Center for Public Policy in > Beijing. > > Henry Ford employed some of the millions of East European immigrants > who poured into the United States a century ago, as well as migrants > from the South and Midwest lured by high wages. China’s leaders must > deal with hundreds of millions of rural laborers coming to cities, who > put downward pressure on salaries. > > “Unskilled workers are condemned for generations to low wages,” Mr. Xiao > said. > > Even a skilled worker like Gong — who also asked that his full name > not be used — said he makes only 6 renminbi an hour as a welder at > Ford’s Chongqing plant, 9 renminbi an hour for overtime. “I have a > dream of someday buying a car,” said Gong, 29, as he walked home in > the rain after a 10-hour shift. “I guess it will take six years of > saving.” > > Bloomberg News > > Copyright 2010 > -- > Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own > way and let people talk.) -- Karl, paraphrasing Dante. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Anthony P. D'Costa Professor of Indian Studies and Research Director Asia Research Centre Copenhagen Business School Porcelænshaven 24, 3 DK-2000 Frederiksberg, Denmark Email:[email protected] Ph: +45 3815 2572 Fax: +45 3815 2500 http://uk.cbs.dk/arc www.cbs.dk/india CONFERENCE: http://uk.cbs.dk/research/konferencer/gena xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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