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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (109510)	2/1/2011 12:32:09 AM
From: GST	5 Recommendations Read Replies (1) \| Respond to of 110194

Hi Russ -- I have no doubt that the model of moving people from their hometowns to workshop towns where workers live in dorms is now a dead model -- dead in the sense that it reached its peak some 5 or 6 years ago and has now become a smaller and smaller factor in Chinese manufacturing. Here is where I have trouble getting excited about this: Five years ago I met with high level officials in the Pearl Delta and they told me that they saw the writing on the wall at that time and that the plan for the region was to reduce the flow of migrant workers and ramp up production near to where people live upriver in places like Chongching -- a city of 30 million people who were a large part of the migrant worker labor force.. And now that is exactly what is happening. We have been watching the growing labor shortages year after year, and the shifting location of Chinese manufacturing. This is a large scale shift that has been going on in a semi-planned way for many years now -- and it could cause some issues to emerge that have a considerable impact as labor costs rise in the south around Guangzhou and work is outsourced where labor is cheaper further and further up the Pearl River delta -- BUT -- a sudden crisis?? Not that I can see. And certainly it is hard to see this as an outcome of a banking crisis. As far as I can see, this is yet another planned stage in a grand transformation -- a transformation that has at time had terrible consequences, but not a sign of a breakdown of the economic development process that China has set for itself.