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Cost Competitiveness Comparisons and Convergence in China

Published online by Cambridge University Press:  26 March 2020

Lili Kang  and
Peng Fei
Lili Kang*
Affiliation:
Tsinghua University, Beijing
Peng Fei
Affiliation:
Centre of Research on the Economy and the Workplace (CREW), University of Birmingham
*
E-mail: lilikang@mail.tsinghua.edu.cn
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Abstract

We investigate trends in regional cost competitiveness in China's four regions (Coastal, Northeast, Interior and West) over the past thirty-five years. We find that the Coastal region lost its initial cost competitiveness as its higher relative labour productivity (RLP) was offset by rapidly rising relative nominal labour costs (RNLC) due to rising wages. The Northeastern region still has cost advantages in the traditional Manufacturing sector. The Interior and West regions improved their competitiveness in most industries due to low RNLCs. There is convergence of relative unit labour cost (RULC) in all industries before 1995, but only in Finance after 1995. However there is convergence in RLP in five industries in 1978–95 and 1995–2009, offering prospects for robust growth for China into the future.

Keywords

Unit labour costregional development planningChinaJ30R58
Type
Research Articles
Information
National Institute Economic Review , Volume 223 , February 2013 , pp. R49 - R60
Copyright
Copyright © 2013 National Institute of Economic and Social Research

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Footnotes

We would like to thank the editor and two anonymous referees for useful comments and suggestions. We also thank Mary O'Mahony, Catherine Robinson, Michela Vecchi, Fiona Carmichael and other participants of the workshop at the University of Birmingham (2012).

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