Take a look at what these two economists said, are they right or not: The Western world now urgently hopes that China will lower its per capita wages.

This is a report co-written by two economists titled "The Real Reason Why the West Is Confronting China." Professor Jason Hickel is considered one of the most insightful economists in the UK today, and Dylan Sullivan is a renowned social scientist in Australia, representing a relatively representative figure in the local area. So what did this report say? Let's summarize it briefly:

At around 2005, China's per capita manufacturing hourly cost was even lower than India's. At that time, China's per capita manufacturing cost was less than $1. Therefore, the Western countries paid much more attention to China's labor market than to other large-population countries like India. During this period, China paid a very high price for its labor force.

Why? Because during this period, China's import and export ratio was very high. A simple example: China needed to export hundreds of millions of jeans to get one airplane, which means China had to pay more to get what it wanted. (PS: What they mentioned here is not only foreign enterprises investing in China, but also our own enterprises exporting products).

The technological advantage of the West plus the low-cost production of the East made the Western world regard China's labor market as a money-printing machine. During this period, instead of thinking about how to confront China, the entire Western world was focused on how to help China produce more goods and reduce the purchasing power of the RMB.

However, when China began to focus on public welfare and infrastructure construction, such as medical insurance, social security, and infrastructure benefits, the labor costs for many enterprises started to surge. Now, China's hourly labor cost has reached $8 (that is, 57 yuan per hour; from the context, it should refer to the labor cost incurred by enterprises, not the amount employees actually receive), far higher than India's $2.

This brings a problem: the costs of all enterprises exporting products to the West have started to soar, and rising costs mean a decline in profits. Therefore, later, Western countries proposed moving industries to places with lower labor costs. However, the cost of doing so is very high, because it involves losses in output, employees, and supply chains. So, the only option left for the West is to force Chinese wages to fall.

How to reduce them? The article discusses several methods: first, reducing the purchasing power of the RMB, second, disrupting the stability of the Chinese market, and third, implementing technology blockades.

Original text: https://www.toutiao.com/article/1839532608982028/

Statement: This article represents the views of the author himself.