We’re accustomed to hearing about the threat to American manufacturing jobs that outsourcing and robot assembly represent. Now, after years of booming growth, China is beginning to have the same trouble, according to Caixin (h/t Sinocism):
Companies nationwide over the past five years have ramped up robotics in the face of labor woes, such as worker shortages and rising wages, and to cut their production costs. In the process, they’ve helped build a new market for Chinese robot manufacturers that are competing against multinational rivals.Labor shortages are partly linked to what Wu says are changing attitudes among young workers. Young adults historically formed the backbone of the country’s assembly-line workforce, but he said many born between 1990 and 1999 now shun manufacturing jobs for other pursuits.The working-age population – defined as those between ages 16 and 59 – is slowly declining. The National Bureau of Statistics said this age group’s population fell by 371,000 in 2013 to about 915 million last year.Moreover, companies looking for inexpensive labor in Asia are no longer focusing on basing plants in China alone, as labor costs in many other countries are far lower. The International Labor Organization says an average worker’s monthly wage is the equivalent of 911 yuan in Vietnam and 603 yuan in Cambodia, for example, but 3,483 yuan in China.
It still costs a lot less to employ a human worker in China than it does in America or Japan, but the robots are getting more competitive all the time, and basic economic logic dictates that China will continue to replace its human workforce:
A Japanese company “could afford to use two robots to replace one worker,” Deng [Qiuwei, general manager at Shenzhen-based Rapoo Robotics Applications Co. Ltd.] said. “But in China, it’s only worth considering when one robot can replace three workers.”That said, a lot of Chinese companies including [appliance Guanzhou-based manufacturing firm] Midea have already decided to push ahead with automation and grow their robot populations.“If it’s a task that a robot can do, we’ll have one do it,” he said. “That’s our strategy.”
This is important: The coming obsolescence of the manufacturing-based structure of modern economies that Henry Ford’s assembly line ushered in a century ago is as much a crisis for the developing world as it is for the advanced industrial democracies where the blue social model has reached full bloom.The economies of the world are infinitely more interconnected than they were at the break of the 20th century, and that means it isn’t likely that countries which are rapidly developing now will go through all the same phases as the Western ones once did. They will leapfrog some key steps. Manufacturing, even in a dynamic economy like China’s, is not going to serve as the platform for a stable, prosperous middle class with lifetime employment. Automation and globalization will squeeze both manufacturing employment and wages as China continues to modernize.Similarly, the automation of information processing — the kind of routine office work that in the past supported middle- and upper-middle-class managers and clerks — is going to compress the demand for knowledge workers in much the same way.These economic developments will affect China and other developing countries just as they are affecting North America, Europe, Japan, Australia, and other advanced economies.There is no place to hide from the emerging information economy.