Improving Pay and Working Conditions in China

Over the last 30 years, China went from abject poverty to the world's second largest economy. It is now at a level of per capita GDP comparable to where America was in early 20th century. What had taken America over a century took China 30 years. The reason is that the development model had already been put into place, and all China had to do was walk the steps.

Right now, China is in a position to do what America did in early 20th century, and that is: Give people a better deal. China is now prosperous enough that it can begin to improve people's working conditions, benefits and pay. Doing that will not only benefit Chinese people, but also give China more respect and appreciation from the rest of the world. And what people need to understand is that this will also be highly beneficial to Chinese economy.

American middle class began in its present form with Henry Ford, who paid his workers enough that they could buy the cars that they were producing. If Chinese workers get higher pay, they will stimulate domestic consumption and create still greater economic growth and more jobs. Improving the Chinese workers' pay, benefits and working conditions is as sensible economically as it is sensible from the humanitarian standpoint. China can afford to do that now, and its economy as much as its people stand to gain greatly.

No longer being desperately poor, China can also afford to let some of the lowest-end jobs go to places that are still impoverished, even as more middle-end jobs get created in the country. Last year China produced more cars than any other country in the world. Like Japan and South Korea before it, China has graduated from making the lowest-end products to products that are more brain-intensive and demand labor with more skill. Much of Chinese economy is still based on production of low-end goods, but they are no longer the mainstay of the economy. China stands to continue achieving high rates of economic growth through production of middle-end and higher-end goods for export and through stimulating domestic consumption by increasing workers' pay rates and making it possible for them to purchase more products and bring about the creation of still more jobs.

Sometimes economic sense differs from common sense. If the common sense says that low pay rates make exports competitive, economic sense says that when a country is no longer desperately poor, for people to earn more money will stimulate domestic demand and lead to creation of more jobs and more prosperity. China is at a point now where it can do that. Improving pay and working conditions in China will lead to economic benefit for China as much as it will lead to Chinese people's benefit.