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An International Comparative Analysis of China’s Labor Cost Advantages (Special Issue, No.111, 2019)

( drc ) 2019-12-20

By Qian Cheng, Institute of Public Administration and Human Resources, DRC

Research Report, Special Issue, No.111, 2019 (Total 1739)  2019-11-15

Abstract: At present, the labor cost of China’s manufacturing industry is continuously rising, the labor cost gap between regions keeps widening, and the comparative advantage of low labor cost for manufacturing industry is weakening. However, compared with developed countries, countries experiencing transforming growth model in Eastern Europe and some of the neighboring countries, China’s manufacturing industry still boasts significant advantages in terms of employment scale. Though China is losing some advantages in absolute cost of labor, its labor productivity has steadily increased, and the gap with developed countries is becoming gradually narrowed. Compared with some of the neighboring countries, China still enjoys the advantage of relatively low cost. In the future, China’s manufacturing industry is facing many challenges, such as aging population, a decrease in the size of labor supply, and the higher standards for labor quality induced by technological progress. It is advisable for us to speed up the adjustment of population policy, further increase investment in human capital, deepen the reform of income distribution and strengthen the building of human resource market.

Key words: manufacturing industry, labor cost advantages, dynamic evaluation model, international comparison