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.