End of cheap labour for China?

One of the leaders in The Economist this week focused on the changes in the Chinese labour market. The average monthly wage is still about 5% of the average monthly wage in the US – approx $197. But shortages of labour especially in the export focused areas, a new labour law, and the forces of supply and demand has pushed up the wages.

This extra income to Chinese workers will hopefully increase spending in the economy – A 20% rise in Chinese consumption might well lead to an extra $25 billion of American exports. That could create over 200,000 American jobs. The article suggests that this extra spending will return the world economy to full employment which I consider very optimistic. Click here for the full article from The Economist.

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