China: internal revaluation from below

Geoff Dyer of the FT says that Chinese workers are demanding more money, and that’s nothing but a good thing – there’s even some demographics in there, if you like that sort of thing.

Instead, the salary hikes in Guangdong this week symbolise a broader shift in favour of labour that has accelerated in recent months and is likely to carry on for a number of years. They reflect powerful demographic shifts resulting from the three-decade old one child policy, with the numbers of new potential workers entering the economy dropping quickly. Economists say China has passed or is close to hitting the “Lewis turning point”, when the pool of surplus agricultural labour tapers off, sparking big rises in industrial wages….

Booming consumption will, in turn, lead to smaller external surplus, as China imports more goods from the rest of the world and helps encourage a rebalancing of the global economy. As long as potential spikes in inflation can be controlled without too much cost, China has a lot to gain from higher wages.

China Labour Bulletin has much, much about a new wave of labour activism in China; they report on a strike at a Honda supplier and a “healthy and dynamic system of labour relations”. The people involved are now following up on their success by giving the convenor of their official, and yellow, trade union the boot.

China Media Project reports on the concept of “stability preservation through exerting pressure”, which seems if I catch their meaning to imply that the Chinese authorities at the top level are willing to tolerate the strike wave as a means of imposing a policy aim of moving to broad-based growth on lower-level governments, Party agencies, and businesses that are doing rather well under current arrangements. The mountains may be high, and the Emperor far away, but that also means the troops may be a long time in coming to save you from the next Mass-Group Incident. Do you feel lucky, punk?

And then, of course, at the Davos/Martin Wolf level of these things, the grand speak to the grand. Ahead of the G20 meeting, the People’s Bank has first suggested that it might be resuming the policy of letting the RMB rise gradually, and then walked it back. Of course, a lot of this might be the typical central bankers’ Noh theatre of allusion. But then again, Renmin tielu wei renmin – the People’s Railway is the People’s.

The same may not be true of the People’s Bank. But I’m sure I’ve seen a translated document at AFOE contributor Jamie Kenny’s place which had senior Chinese officials recommending that social conflicts should be resolved by “giving the People the People’s Currency Unit”, i.e the renminbi, or in other words, by leaning on management to give in on their demands in so far as they involve pay rather than politics.

Internal revaluation in Exportland is a viable option. Especially, it’s an improvement over more bubbles.

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