China wants to boost Bangladesh economy

[extra terrestrial]

This is all too confusing. You say India is a threat, in another thread i read about two nation theories and Bangladesh was included in one of the posts. The spirit of that post, which came from a respectable senior member of PDF staff was that your three countries are like long lost brothers.

India is generally perceived as a threat by most of its neighbors due to its meddling in their internal affairs.

 

[kalu_miah]

In that case, we first need to wait for the disputes get resolved before having such an international institution. If they went on to set up such an institution without resolving the disputes and without keeping any room for resolving the disputes within its scope, it will turn into another SAARC undoubtedly.

Well it does seem hopeless to me, the differences are huge, mostly propagated by the outsiders. The general South Koreans are specially reluctant to the reunification. It would need hundreds of billions of dollars to invest on the under developed parts of North Korea for its economic prosperity, where would they get those money from? Obviously from the tax payers of South Korea.

I got the point, but still I don't think Asian NATO would come into being in near future. Besides, countries like Vietnam also expressed their skepticism about US influence over the region, militarily, it's also quite close to Russia.

We will have 15-20 years before those institutions are initiated. The disputes should not stand in way, whether they are between member countries or between a member country and a nonmember country.

You have the wrong impression about Korea, just trust me on that one. Most intelligent and knowledge able Koreans want unification, it is only foreign outsiders and the morons they brainwashed have doubts about it. It will happen gradually, not like Germany.

 

[Audio]

I don't have the link I am on a tablet but Foxconn, that makes iphones, could not find enough workers on the coast and had to move to inland provinces like Sichuan and Henan to get the labour it needed. It went to find workers as there is shortage on the coast and is saving little in labour costs.

This is not a fair example in my opinion. Foxconn has committed itself due to pressure from Apple and the general public to higher wages. And as you will see according to this article, specifically at Foxconn, it is already severely hurting their profits margins, already low at 4%. So, one could maybe assume there really isn't much more room for wage growth anymore.

Unless they transfer the excess cost down the line, but then it only becomes a matter of time before someone else will be cheaper. And no rich man wants his company to go bust because he allowed wages to go too high.

iPhone manufacturer Foxconn to double worker salaries by 2013 | ZDNet

Ten years ago, it would be true that there were large differences between coastal and interior provinces but the Chinese government is determined to bring all areas of China to similar levels by 2020.

Being determined and what is happening in reality do not match.
One could reasonably expect if the issue was being dealt with, that at worst the inequality would still be rising, but slower. But it's growing faster, so whatever they are doing, it doesn't seem to have an effect. Which i'm sure is connected somehow to the fact Foxconn cannot pay more then it currently pays.
Namely, what we are seeing now at Foxconn might just be the high end of manufacturing wages. Which might be a recipe for social unrest at the minimum because the Chinese public demands a decrease in inequality, but the CCP through it's companies and multinationals won't be able to give it to them, because then the economic model gets unsustainable.

Chinese people already say they believe -- in a 2012 survey, they ranked inequality as the nation’s top social challenge, above corruption and unemployment, the report showed.

China’s Income Inequality Surpasses U.S., Posing Risk for Xi - Bloomberg

One good indications that labour supply is tight in China is that it has now become the largest buyer of industrial robots. If it had plenty of surplus labour then it would not have done that.

A quick search on this topic reveals that

The further growth potential is huge: in 2012, China had just 23 robots for every 10,000 people employed in the manufacturing industry, compared with 396 in South Korea.

meaning robots are vastly underrepresented, and how wouldn't they be in the world's most populous nation and furthermore and more importantly, the main buyers are multinationals in the automotive sector, a far cry from the low value added industry.

The increased demand for robots in China is being driven primarily by large multinational manufacturers, especially in the automotive sector.

China becomes largest buyer of industrial robots - FT.com

India is generally perceived as a threat by most of its neighbors due to its meddling in their internal affairs.

Thanks for the clarification.

 

[UKBengali]

This is not a fair example in my opinion. Foxconn has committed itself due to pressure from Apple and the general public to higher wages. And as you will see according to this article, specifically at Foxconn, it is already severely hurting their profits margins, already low at 4%. So, one could maybe assume there really isn't much more room for wage growth anymore.

Unless they transfer the excess cost down the line, but then it only becomes a matter of time before someone else will be cheaper. And no rich man wants his company to go bust because he allowed wages to go too high.

OK, let us use real data of average manufacturing wages across provinces in China. For simplicity I will convert to US dollars and quote the wage per month as they were in 2011.

All figures are to be found on this site

We shall use the following 3 provinces to make a comparison:

1. Guangdong - Coastal province with population in excess of 100 million
2. Henan - Inland province with population near 100 million
3. Sichuan - Inland province with population of 80 million

Guandong has average salary at 440 dollars
Henan has an average salary at 507 dollars
Sichuan has an average salary at 225 dollars.

Yes, an inland province like Henan now has higher manufacturing wages than a coastal province like Guandong!
Inland Sichuan is still quite low but even at 225 dollars it is 3-4 times higher than in Bangladesh.

So already the big inland province of Henan cannot support the low-tech manufacturing as its manufacturing wages have risen to higher than coastal Guangdong, that has living standards as good as the poorer parts of the EU already

There are some other provinces similar to Sichuan that are quite low in manufacturing wage levels but their populations are less than 50 million and the wages are rising like a rocket. As an example the average manufacturing wage in Henan doubled between 2009 and 2011!

So I ask you, where are those 800 million impoverished Chinese that can do the low-cost jobs that cannot be done anymore in the coastal provinces?

 

[Audio]

OK, let us use real data of average manufacturing wages across provinces in China. For simplicity I will convert to US dollars and quote the wage per month as they were in 2011.

All figures are to be found on this site

We shall use the following 3 provinces to make a comparison:

1. Guangdong - Coastal province with population in excess of 100 million
2. Henan - Inland province with population near 100 million
3. Sichuan - Inland province with population of 80 million

Guandong has average salary at 440 dollars
Henan has an average salary at 507 dollars
Sichuan has an average salary at 225 dollars.

Yes, an inland province like Henan now has higher manufacturing wages than a coastal province like Guandong!
Inland Sichuan is still quite low but even at 225 dollars it is 3-4 times higher than in Bangladesh.

So already the big inland province of Henan cannot support the low-tech manufacturing as its manufacturing wages have risen to higher than coastal Guangdong, that has living standards as good as the poorer parts of the EU already

There are some other provinces similar to Sichuan that are quite low in manufacturing wage levels but their populations are less than 50 million and the wages are rising like a rocket. As an example the average manufacturing wage in Henan doubled between 2009 and 2011!

So I ask you, where are those 800 million impoverished Chinese that can do the low-cost jobs that cannot be done anymore in the coastal provinces?

The article below has a roughly all the answers to your post. You concentrate too much on one factor in my opinion.

Manufacturing: The end of cheap China | The Economist

China's advantage lies also in supply chain value, infrastructure, which in some cases outweigh the higher labor cost. And they will not stop at building infrastrucure any time soon, because investment in infrastructure represents one of the pillars of GDP growth.
Even more, they are expanding infrastructure, and consequentially, the supply chain requirements, towards inland, where there are still lower wages.

As for your site and info. It all looks good on paper. But then you have cases like Yue Yuen in the last months, where 40.000 workers went on strike because they found out the company hasn't been paying their obligations to them. Namely, pension and medical insurance. Coincidentally, they work in the same low added value sector you say will move out of China.

Yue Yuen counts cost of China shoe strike, says most workers returned| Reuters

that has living standards as good as the poorer parts of the EU already

Can you tell me of a country there that has a monthly pension in the range of 7-15€'s? No, right?
---------------------

As a finishing thought, the country most likely to replace China or at least come close to it's status of factory of the world is Mexico.

 

[UKBengali]

The article below has a roughly all the answers to your post. You concentrate too much on one factor in my opinion.

Manufacturing: The end of cheap China | The Economist

China's advantage lies also in supply chain value, infrastructure, which in some cases outweigh the higher labor cost. And they will not stop at building infrastrucure any time soon, because investment in infrastructure represents one of the pillars of GDP growth.
Even more, they are expanding infrastructure, and consequentially, the supply chain requirements, towards inland, where there are still lower wages.

As for your site and info. It all looks good on paper. But then you have cases like Yue Yuen in the last months, where 40.000 workers went on strike because they found out the company hasn't been paying their obligations to them. Namely, pension and medical insurance. Coincidentally, they work in the same low added value sector you say will move out of China.

Yue Yuen counts cost of China shoe strike, says most workers returned| Reuters



Can you tell me of a country there that has a monthly pension in the range of 7-15€'s? No, right?
---------------------

As a finishing thought, the country most likely to replace China or at least come close to it's status of factory of the world is Mexico.

Man, you are desperate now

You made bold claims of 800 million impoverished that are waiting for China's low-tech manufacturing job and then you come
up with nonsense when I give you proof that an inland province, Henan, with a population of nearly 100 million has higher wages than a coastal province like Guangdong.

And look at below to see how BD's exports to China are rocketing:

http://archive.thedailystar.net/beta2/news/exports-to-china-rising-fast/

It has gone from only 178.63 million in fiscal 2009-10 to $458.11 million in fiscal 2012-2013.

The main reason is the zero tariff duty extended in July 2010 and China only wants to increase imports at a far faster rate. The only thing stopping is lack of supply from BD due to recent political problems(now sorted) and infrastructure constraints.

BD could easily increase to many billions of dollars by 2020 at the rate it is going.

 

[Audio]

Man, you are desperate now

You made bold claims of 800 million impoverished that are waiting for China's low-tech manufacturing job and then you come
up with nonsense when I give you proof that an inland province, Henan, with a population of nearly 100 million has higher wages than a coastal province like Guangdong.

And look at below to see how BD's exports to China are rocketing:

Exports to China rising fast | Shipments to China rose 14pc year-on-year to $458.11m in fiscal 2012-13
It has gone from only 178.63 million in fiscal 2009-10 to $458.11 million in fiscal 2012-2013.

The main reason is the zero tariff duty extended in July 2010 and China only wants to increase imports at a far faster rate. The only thing stopping is lack of supply from BD due to recent political problems(now sorted) and infrastructure constraints.

BD could easily increase to many billions of dollars by 2020 at the rate it is going.

Ya, i'm desperate. You're counting chickens before they hatch.

And fact is, only about 3-400 million of Chinese can count themselves as middle class, they say this themselves.

In 2012, nearly a quarter of the population—or 300 million people—had “significant discretionary spending power,”

And this is middle class with average pay ranging from 400€ to 700€'s. Barely enough for middle class at the top range, and virtually impossible anywhere in the west.

As for imports from BD, lol, they throw you crums after you give the pie to them.

 

[Cold Blood]

I would like to see China giving us technical assistance in the electronics, shipbuilding and genetic engineering sectors. We should have joint venture R and D centres.