The China Thread

[Phillip V]

http://online.wsj.com/article/SB10001424127887323798104578453073103566416.html

[The Brain]

GL China. I'm not paying a guy $4 an hour.

[The Minsky Moment]

This is really a dog bites man story.

What is supposed to happen as a country develops successfully is that productivity gains eventually translate into higher wages and worker incomes.  As part of that process, the developing country eventually exits low valued-added, commoditized production for higher value production where productivity and technology matter more than raw wage levels.  This is a classic pattern that in the specific Asian context has been analogized to "flying geese": http://en.wikipedia.org/wiki/Flying_geese_paradigm.

In fact, the only thing that is a little unusual about the China example is that Chinese wages have increased more slowly than what could be merited given high levels of manufacturing productivity (roughly equivalent to that of a country with per capital GDP more than double current Chinese levels). 

[MadImmortalMan]

In fact, the only thing that is a little unusual about the China example is that Chinese wages have increased more slowly than what could be merited given high levels of manufacturing productivity (roughly equivalent to that of a country with per capital GDP more than double current Chinese levels).

Why? Is it related to how our wages disconnected from the productivity increase?

[The Minsky Moment]

Why?

It's hard to pinpoint because the Chinese economy is an odd hybrid of market and command systems.  A lot of the value added that is generated by the economy may be siphoned off in the form of corruption, or alterantively in stockpiling trillions of dollars in the form of inert foreign exchange reserves.  At the level of the labor market, the hukou system and the absence of any real unions also probably suppress wage growth.

[Ancient Demon]

I'm a little surprised that labor costs are higher in China than in Thailand. I was under the impression that Thailand was more developed than China.

[Josquius]

Chinese wages have increased a fair amount.
By all accounts there's too many jobs in China and not enough workers, they can pick and choose where they work, which is really boosting up the prices.

Maybe Thais don't have quite so horrific conditions when they work so the low pay doesn't seem so bad?

[CountDeMoney]

I'd like to see the wage breakdown in China according to region.  I bet it's even higher than the $4 that chart shows along the coast than it is deep in the outback.

[Phillip V]

New York Times headline: China Is Nearing U.S.'s Military Power in Region

http://www.nytimes.com/2013/05/02/world/asia/china-likely-to-challenge-us-supremacy-in-east-asia-report-says.html

[CountDeMoney]

Meh, those Carnegie people are weenies.

[Eddie Teach]

China Is Nearing U.S.'s Military Power in Region

That would be cause for concern if our power in other regions was immobile.

[Malthus]

I'm a little surprised that labor costs are higher in China than in Thailand. I was under the impression that Thailand was more developed than China.

Depends very much on region. Thailand looks very different from Bangkok as opposed to, say, Isan.

[The Minsky Moment]

Can't find the Carnegie report so can't really comment.
However, the premise that China is narrowing the gap in carrier capability is questionable.  China's carrier program is very embryonic at this point - more like zygotic.  the amount of work that needs to be done in terms of developing effective cadres of pilots, deck crews, and the massive tail of logistical support is enormous.  Not to mention there is currently zero capability to construct or source modern carriers, which is why their sole carrier now is a refurbished 25 year old ex-Soviet wreck.  And it's not like the US is standing still on modernizing and improving its own carrier capability.
More generally, China's ability to project power cannot be measured by a simple count of front-line combat planes, subs, ships, and modern weapon systems.  China's military capabilities away from home base are hamstrung by its weak supply and logistic system and that is going to take decades to improve. 

That said, their capability for home defense and denial of access to their local area is already impressive and is likely to continue to improve.

[Syt]

The official Communist party newspaper, Renmin Ribao (People's Daily),  is building a new headquarters for themselves. Err . . .

[Tonitrus]

Are you trying to imply the architect made a cock-up?