As China matures and its labour policies and pay improves, it will become less competitive for low-cost production. The question is: can China move up the manufacturing value chain fast enough to avoid the predictable problems it will face?

See also:

China Daily Mail

China Trade UnionAs Chinese labour becomes more expensive and a disaffected migrant workforce increasingly stays home, an increasing share of China’s export manufacturing business is drawn to cheaper venues in Southeast Asia.

But this is only the tip of a very large iceberg.  The rise of labour protest in China and the systemic problems which underlie it are one of the main challenges facing the country as modernisation proceeds.

Labour protest have increased rapidly over the past decade.  Incidents of mass protest in China increased by an average of 20% per year between 1993 and 2005, with an average increase in nationally arbitrated labour disputes of 20.6% per year between 2000 and 2007.

Increasingly, labour protests take the form of chain-reaction strikes, in which a single strike will lead to others throughout an industry or geographic area.  In 2010, a strike at a Honda plant  led to a cascade of strikes throughout…

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