Hostname: page-component-cd9895bd7-p9bg8 Total loading time: 0 Render date: 2024-12-25T19:01:36.361Z Has data issue: false hasContentIssue false
  • English
  • Français

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
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

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).

References

Banister, J., (2005), ‘Manufacturing earnings and compensation in China’, Monthly Labor Review, August, pp. 22–40.Google Scholar
Ceglowski, J.Golub, S., (2007), ‘Just how low are China's labour costs?’, The World Economy, 30 (4), pp. 597–617.CrossRefGoogle Scholar
Chen, V.W.Wu, H.X.Van Ark, B., (2009), ‘More costly or more productive? Measuring changes in competitiveness in manufacturing across regions in China’, Review of Income and Wealth, 55 (1), pp. 514–537.CrossRefGoogle Scholar
Cox, W.M.Koo, J., (2003), ‘China: awakening giant’, Southwest Economy, Federal Reserve Bank of Dallas, 5.Google Scholar
Fleisher, B.Li, H.Zhao, M., (2010), ‘Human capital, economic growth, and regional inequality in China’, Journal of Development Economics, 92 (2), pp. 215–231.CrossRefGoogle Scholar
Hsueh, T.Li, Q., (1999), China's National Income, 1952–1995, Boulder, Westview Press.Google Scholar
Jefferson, G.H.Rawski, T.G.Wang, L.Zheng, Y., (2000), ‘Ownership, productivity change, and financial performance in Chinese industry’, Journal of Comparative Economics, 28 (4), pp. 786–813.CrossRefGoogle Scholar
Li, H., (2003), ‘Economic transition and returns to education in China’, Economics of Education Review, 22 (3), pp. 317–328.CrossRefGoogle Scholar
Ma, J.Norregaard, J., (1998), China's Fiscal Decentralization, Washington DC, International Monetary Fund.Google Scholar
Oates, W.E., (1972), Fiscal Federalism, New York, Harcourt Brace Jovanovich.Google Scholar
Peneder, M., (2009), Sectoral Growth Drivers and Competitiveness in the European Union, European Commission.Google Scholar
Qian, Y.Weingast, B.R., (1997), ‘Federalism as a commitment to perserving market incentives’, The Journal of Economic Perspectives, 11 (4), pp. 83–92.CrossRefGoogle Scholar
Szirmai, A.Ren, R.Bai, M., (2005), ‘Chinese manufacturing performance in comparative perspective, 1980–2002’, Working paper.Google Scholar
UNCTAD (2002), China's Accession to WTO: Managing Integration and Industrialization, Trade and Development Report, pp. 141–174.Google Scholar
Van Ark, B.Stuivenwold, E.Ypma, G., (2005), Unit Labour Costs, Productivity and International Competitiveness, GGDC Research Memorandum GD-80.Google Scholar
Zhang, J.Zhao, Y.Park, A.Song, X., (2005), ‘Economic returns to schooling in urban China, 1988 to 2001’, Journal of Comparative Economics, 33 (4), pp. 730–752.CrossRefGoogle Scholar