Farm vs Blue-Collar Wages in China

The latest radioeconomics podcast with Dr. Fan Gang contains this bit of information about Chinese workers (starting at about 17:00):

The labor costs remain low for quite a long time. Why? Because, although in the past 20 years, China has relocated 200 million rural labor force into the industries and the service sectors, there's still 200 to 300 [million] workers -- labor workers -- in the farming sector (in the agricultrual). Most of them are waiting to move out. Their wage is even lower. You know, in the blue-collar workers, in the industries now, can make $1000 US Dollar per year., but the rural farmer only make $400 or $500 US Dollars per year. So they are looking for the job too. They are competing in the job market who are already in the sector, in the industries.... They are waiting for more jobs... People are desperate for the jobs.

Also, starting at 31:45, he notes that China's large ownership of U.S. government securities is not, in itself, a problem:

Number 1. We need to think about the problem -- not of who buys the treasury bonds, but why you issue so much Treasury Bond. I think that is the fundamental Issue... whoever buys the bonds depends on how much you issue. America's fiscal deficit is the issue we need to worry -- all we need to worry. Not only America... America may not worry very much, but we need to worry very much. Because, this is, from my point of view, as a macroeconomicst, this is a fundamental reason why the U.S. Dollar keeps falling.... One of the fundmantal reasons is the fiscal deficit... I would say the real problem is not who buy... is the why you issue so much.

I don't think the Chinese will stop buying... If we have more foreign reserves, we need to... get the best revenue... from this resource... You need a portfolio... avoid most of the risk.

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This page contains a single entry by Kevin published on October 10, 2005 2:52 PM.

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