Friday, May 18, 2007

Oriental thoughts

While visiting China the last 10 days I managed to see lots of terrific sites: The Great Wall, Forbidden City, the terra cotta warriors, Shanghai History Museum and more ... all worth seeing. However, what most caught my eye from a blogging persepctive were a couple pieces of economic news.

1) There was a great deal of discussion about China's burgeoning trade surplus with the US and the various effects of it. Chinese leaders are concerned enough about it they seem willing to broker deals for materials they don't necessarily need (such as a recent agreement to purchase $4.3 billion in high-tech goods) just to help keep the trade difference closer.

What really got my attention, though, was several articles discussing China's trade surplus also mentioned China's monetary reserves. I.e., unlike the US and it's vast national debt, China actually has money in the bank (unfortunately, the articles I saw didn't give a figure -- the only one I have seen was from 2003, at which time the amount was $46 billion).

In my lifetime there have been a handful of individual years when the US ran a surplus, but the nation has never had an overall net surplus. I can think of some drawbacks -- you could argue you would rather have the money working for you on, say, freeway building rather than sitting around in the bank, for example. However, it must also be nice to not be paying billions of dollars a year in interest payments, and to have funds available for an emergancy -- like, say, a hurricane destroying the city of Anshan.

All-in-all, I don't think I would mind too much struggling with the inherent problems of having an overly large national surplus as opposed to having an overly large national debt. I suspect the problems which might come with having a surplus would be easier to deal with. Sadly, they are unlikely to be problems our nation will ever have to deal with in my lifetime, esepcially if we keep ending up with bozos in office who insist on instituting tax cuts while simultaneously instigating unjustified wars.

2) There's been a lot of angst in recent years about jobs moving to China. Many of those jobs are industrial, but it extends across to professional fields such as accounting, software development, biomedical research, etc. as well. The general perception in this country (at least, in the circles I run in) seems to be of a never-ending horde of Chinese workers willing to fill roles at lower wages.

The view in China is different.

Recent studies there show the labor pool drying up by 2009 or 2010. So far, the Chinese economy has prospered by basically being able to throw more manpower into any field where additional manpower might be needed. Labor costs have remained largely static, because there were always more laborers available.

This upcoming squeeze in labor is generally attributed to the maturation of China's Birth policy, which has been successful in limiting population growth. This squeeze will cause further increase in labor wages (which are already rising slowly, but sufficiently to cause some manufacturers to move positions from China to even cheaper locales) and will likely force Chinese industry to invest in more advanced production methods (which will allow more to be done with less manual labor).

Most interesting to me, nothing I read discussed possibly changing China's retirement policy. White-collar women in government companies or institutions have a mandatory retirement age of 55, 60 for men, For blue-collar jobs, it's 50 for women, 55 for men. You would think raising these ages (particularly for women), or simply not making retirement mandatory, would add tens of millions of potential laborers back to the pool.

2 comments:

x4mr said...

While I have some background in eastern religion and spirituality, I know very little about the practical on the street workings of Chinese culture. My understanding is that the educational stratification is intense.

By that I mean that while a certain portion of the population is extremely well educated, there are huge numbers of rural populations that have virtually no education.

The retirement policy you cite is ripe for modification as the lack of workers starts to draw blood.

The Chinese infrastructure production is staggering, and as this infrastructure matures everything will shift. Now they are "laying track" and before long they will be "running trains."

Again, congratulations on your marriage. As the risk of appearing rather crude, I am compelled to offer the following. Beginning with the ceremony, every time you and your significant other enjoy intimacy, place a penny into a jar.

Do this for a year.

After the celebration of your first anniversary, every time you are intimate with your partner, take a penny out of the jar.

See how many years it takes to empty the jar.

Sirocco said...

Well, there is certainly a great deal of educational stratification, but my impression is things are improving rapidly, in urban areas at least.

I did spend a few hours at a public school, watching young students (5-9) in some classes. The school was, I suspect, one of the better ones but a visiting teacher from Britain assured me it wasn't atypical. I.e., it wasn't a school for elite, top-ranked children. The class sizes were about 20 to a room, and classes seemed well-structured.

Toward the end, those of us visiting were treated to a music recital from 8 of the students, performing individually. For the 5th student, a pianist, the interpreter mentioned he was five years old. Without missing a beat, the little boy said "No, I am six!" quite indignantly, and then proceeded to beat out his piece in quite fine fashion. After that, the last three performers took pains to mention their ages (all were 6) with perfect English before their recitals.

All eight performances (three boys, five girls) were terrific.