Dim Sums: Agricultural Markets in China

On May 29, China's National Bureau of Statistics (NBS) released estimates showing rapid growth in average wages for private employers and non-private employers (state-owned companies). Annual wages paid by private employers increased by 18.3% in 2011 to reach 24,556 yuan. Manufacturing wages were up 20.1%. Annual wages paid by non-private employers (government and state-owed enterprises) increased 14.3% in 2011 to reach 42,452 yuan. By far, the highest wages reported were in non-private financial services (state-owned banks) at 91,364 yuan and non-private information and computer services 70,619 yuan. These numbers are not adjusted for inflation. The China CPI number of 5.4% for 2011 is often offered as the measure of inflation but there is wide variation in price increases depending on which index one looks at. So it's hard to say exactly what inflation is in China.  Wage growth numbers shown above were more than three times faster than reported CPI inflation. Howev...

The National Bureau of Statistics (NBS) reports that 245 million rural people are employed in nonfarm activities , up 10 million from last year. Their average monthly earnings from nonfarm employment were up 21% from last year, suggesting rapid growth in wages (average hours of work decreased). The numbers reflect an exodus out of agriculture and rising opportunity cost of labor in farming. Each year NBS surveys 200,000 rural laborers from over 7500 villages in 899 counties to ascertain the number and characteristics of rural people engaged in nonfarm employment. The survey total includes rural people engaged in a nonagricultural job or business for at least 6 months of the current year. It includes migrants working outside their home township and people employed near home (in their home township). Source: Dimsums chart created using data from National Bureau of Statistics.  Nonfarm jobs are primarily in urban areas, prompting a huge migration of itinerant worker...

Recently, there have been reports of labor shortages in China's coastal manufacturing regions. A Sept. 30 article in the Farmers Daily provides some good economic analysis of the emergent labor scarcity. The article notes that a July report from Zhejiang Province said employers were only able to hire 354,000 of the 603,000 they wanted, and a Shenzhen's labor shortage increased form 23,000 in April to 60,000 in June. The author asks, "Where did all those people go?" Moreover, there are seemingly contradictory reports of many rural workers who can't find satisfactory work and other factories who have no problem finding work. The author argues that China doesn't have a shortage of labor; it has a shortage of cheap labor. The recent experience of factories hiring workers as commodities at rock-bottom wages is not the future of China. Rural Chinese people are gaining more skills and higher expectations for their lives. Moreover, they have more choices. There are mo...