Wage inequality root of unrest - Wang Jianmao

Wang Jianmao

Increased social unrest is triggered off by the huge wage inequality in the country, tells CEIBS professor Wang Jianmao in the Australian news paper The National.

While official figures are hard to come by, "the people realise the situation is very bad", says Wang Jianmao, a professor of economics at the China Europe International Business School in Shanghai. Prof Wang partly blames China's model of development for the extent of inequality.

"The emphasis so much is, for example, on manufacturing and investment [but] services are underdeveloped," he says. "We ensure that capital can always get very high returns. We fail to generate enough jobs. That has suppressed the labour income."

While in the cities there is an income gap between many of China's 230 million migrant workers and the better-off locally registered residents, a key factor in inequality is the urban-rural divide.

More in The National.

Professor Wang Jianmao is a speaker at the Chinese Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Why Nouriel Roubini is wrong on China - Shaun Rein

Nouriel Roubini via Wikipedia

The famous economist Nouriel Roubini predicted the American financial crisis, and now says China is in trouble in 2013, writes Shaun Rein in CNBC. But he is dead wrong on basic trends on income, demographics and investment trends.
Shaun Rein on the wages:

Roubini also underestimates wage growth. Minimum wages in Sichuan rose 44 percent last year, mirroring double-digit increases elsewhere. Beijing’s municipal authorities even announced multinationals should have minimum wages 1.5 times that of local firms. Wage inflation is so serious that Foxconn, the maker of products from Amazon.com to Intel and Apple, is mulling a $12 billion investment into Brazil as China no longer has a cheap labor pool.
ntrepreneurs often park profits in their companies rather than taking them out as dividends or salaries as corporate taxes are lower. They also charge housing, vehicle and even gym membership fees as business expenses. This is why income is often understated by economists who don’t dig deep enough.

More in CNBC.

Shaun Rein by Fantake via Flickr

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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US IT programmers for a China price - Bill Dodson

Bill Dodson

The pendule of globalization is now moving towards the US, notes Bill Dodson in his weblog, where IT programmers cost a much as those in China. An analysis of the moving IT market in the eyes of Bill's American friend:

“They sharpest ones (in India) took their money and left. And the country hasn’t cultivated the rest.” She was enthusiastic about the Dutch, who are producing some “amazing” technologies, she said. She’s also working with a Finnish team. “The Finns are doing some cutting-edge stuff,” she added. So what else is there to do during those long, cold, dark winter days, I wanted to quip (but didn’t). I asked her about the Chinese software team she had been working with six months ago.

“They were so-so. Nothing really sparkling. And now, because the economy in the States has been so bad, American developers are now costing me about the same price.” She gave me an example. “A Chinese team leader quoted me a price of 300 rmb per hour for a programmer. That’s more than $20 and hour: I can get a really good American programmer for that price – and we’ll have a cultural affinity that I’ll never have with the Chinese, even though they may just be a fifteen minute drive down the road from me (in Suzhou).”

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Bill Dodson is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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