Chinese labor costs remain advantages

Updated: 2012-07-31 17:36

(chinadaily.com.cn)

Although labor costs in China are gradually losing their advantage, the advantage will still remain for a period of time, reported People's Daily Overseas Edition on Tuesday.

Surging labor costs in China have placed pressure on some foreign corporations and commerce organizations, leading them to consider moving factories to lower wage countries in Southeast Asia.

According to the report, research conducted by Natixis, the corporate, investment management and financial services arm of Groupe BPCE, predicted that labor costs in China will overtake the United States in the next four years, catch up to euro-zone countries within the next five years and keep pace with Japan in seven years.

Xu Hongcai, vice minister of the Information Department of China Center For International Economic Exchanges, pointed out that inflation has caused a rise in living costs, and with China's global economic integration, Chinese wage levels have also geared to international standards. These factors have also contributed to the rise in labor costs in China.

But he noted that China's advantage in labor costs will not disappear in the short term, as the wages of US workers in the manufacturing sector are several times higher than their Chinese counterparts, and China still has labor surplus in the rural areas. Besides, for international corporations, moving factories across nations is a daunting task which requires a lot of input.

The IMF estimated that although China's surplus labor supply is decreasing, the surplus will remain till the period between 2020 and 2025.