1/10
Thanks to Pekingnology for translating a speech by Fudan University’s Zhang Jun that explains very well why China must adjust its growth model, and how. Zhang recognizes very clearly that a once-successful development strategy is now obsolete.
pekingnology.com
Thanks to Pekingnology for translating a speech by Fudan University’s Zhang Jun that explains very well why China must adjust its growth model, and how. Zhang recognizes very clearly that a once-successful development strategy is now obsolete.
pekingnology.com
2/10
But the need to raise wages, he says, “is a significant blind spot in the discussions within the Chinese economic academic community, as all the discussions revolve around the development of enterprises and industries, with very little attention given to wage issues.”
But the need to raise wages, he says, “is a significant blind spot in the discussions within the Chinese economic academic community, as all the discussions revolve around the development of enterprises and industries, with very little attention given to wage issues.”
3/10
“China has not yet developed an effective policy framework for determining fair wages,” he continues, “and the mechanism for collective bargaining is virtually nonexistent. China needs a reasonable wage formation mechanism that can better synchronize with GDP growth.”
“China has not yet developed an effective policy framework for determining fair wages,” he continues, “and the mechanism for collective bargaining is virtually nonexistent. China needs a reasonable wage formation mechanism that can better synchronize with GDP growth.”
4/10
He argues that it is “crucial” that Beijing switch, “as soon as possible”, from a supply-side model focused on investment to a demand-side model focused on raising wages, “to address the transition from the catch-up model to a post-catch-up era.”
He argues that it is “crucial” that Beijing switch, “as soon as possible”, from a supply-side model focused on investment to a demand-side model focused on raising wages, “to address the transition from the catch-up model to a post-catch-up era.”
5/10
The switch should have happened at least a decade ago, according to Zhang, and because it didn’t, China has wasted resources on investment with no real return for the economy.
The switch should have happened at least a decade ago, according to Zhang, and because it didn’t, China has wasted resources on investment with no real return for the economy.
6/10
But while it is good that more and more of China’s leading economic policy advisors recognize how urgent it is that China rebalance away from investment to consumption, and what that requires, I think they still do not recognize why it will be so difficult.
But while it is good that more and more of China’s leading economic policy advisors recognize how urgent it is that China rebalance away from investment to consumption, and what that requires, I think they still do not recognize why it will be so difficult.
7/10
In the same speech, for example, Zhang talks about the impregnable strength of Chinese manufacturing versus that of the US and other countries, but he fails to recognize the extent to which this strength is the result precisely of China’s extremely unbalanced growth.
In the same speech, for example, Zhang talks about the impregnable strength of Chinese manufacturing versus that of the US and other countries, but he fails to recognize the extent to which this strength is the result precisely of China’s extremely unbalanced growth.
8/10
China’s manufacturing competitiveness is not “natural”, and certainly not inevitable, but instead is based on the enormous direct and indirect subsidies that are the obverse of the low wage share that he correctly wants to reverse.
China’s manufacturing competitiveness is not “natural”, and certainly not inevitable, but instead is based on the enormous direct and indirect subsidies that are the obverse of the low wage share that he correctly wants to reverse.
9/10
That is why rebalancing has always been so difficult for other countries, and is likely to be even more difficult for China. It means improving the quality of growth in the medium and long term, but at the expense of an overly-cosseted manufacturing sector in the short term.
That is why rebalancing has always been so difficult for other countries, and is likely to be even more difficult for China. It means improving the quality of growth in the medium and long term, but at the expense of an overly-cosseted manufacturing sector in the short term.
10/10
He is right, in other words, to say that at this stage China’s economy requires that wages catch up to GDP, but what he doesn’t recognize is the extent to which China’s manufacturing and export strength are based on the fact that wages have lagged for so long.
He is right, in other words, to say that at this stage China’s economy requires that wages catch up to GDP, but what he doesn’t recognize is the extent to which China’s manufacturing and export strength are based on the fact that wages have lagged for so long.
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