Chillin' out till it needs to be funded
China’s plans to encourage more interior areas to develop than the eastern coast where all urban conglomerations are aggregated has worked out to perfection, a case of the plan following the economic wave to the T. As labor mostly migrates from the interiors to the coast and labor is demanding higher wages and a better quality of life during this time of struggle, China’s labor is itself getting a new lease as factory owners decide to migrate their plants to the interiors.
Of course that is only possible for labor intensive and manual factories like for textiles ( readymades) and stuffed toys among other key Chinese exports to its largest trade partners including Europe and Brazil despite WTO restrictions. Most of the manufacturing bottlenecks from supply of raw materials have hit heavy industries harder in metal and mining based output or those using a lot of power and automation. Such factories as of now have not reported moving to the interior and are however reporting lower output and more plant shutdowns, unwilling to buy expensive metals for raw materials.
In Automobiles, the churn in China continues as out of the 74 reported domestic manufacturers of Automobiles, 50 or 60 have reported diminished scale while a couple like BYD who have decide to move plants to Brazil for fulfilling Brazilian demand have reached a production number stable from last year and close to 400k units a year. GM thus sells nearly a 1 million cars a month by itself with Audi and BMW now adding production in India and China Earlier producers from the US like NPR shifted back to home soil finding production in the US as competitive to producing it cheaper in China. Many US manufacturers incl Green industries like Solar Panels, export raw materials to the US and import manufactured goods for sale. Others have their components built in China where they earlier produced them only in Japan incl Apple’s parts for its touch screen and other sensitive components for the iPhone and iPad
China’s economy has b een losing consumption from more than 50% to nearly a 1/3 rd of the GDP as also its Services component is still working better than domestic industry. Foreign invested Enterprises produce $1.7 tln annually in the Chinese economy (2011) where International trade surplus of $150 bln is still a subject of debate with its largest partners US and Europe where it maintains more than its overall surplus as resource based imports majke a deficit equation with other trading partners. China’s exports of $2 tln in 2011 with a Novembner high of $174.5 bln are however, dependent on its 34% share of resource and labor intensive products. Its overall share in World exports thus may plateau at 10% while more even development and the revival of the consumption mode in the domestic economy is kindled in the next few years.
China has also been resorting to more sophisticated responses to its partners’ various complaints and what it sees as one sided agreements in the WTO and its armed forces are also keen on a presence in future global strategy for the nation. In all these struggles, it is again significant that it has managed to target the right modal development concerns, in this case migration of labor being replaced by more employment giving manufacturing plants moving internallya s well as outside the country.
When compared with the more chaotic transparent governanceissues in BRIC colleagues and Europe and the USA in 2011 China seems to have agin proven its point to India and its traditional foes in the USA Meanwhile the USA has stripped down its $700 mln aid for Pakistan as it leaves the NATO bases back in control of the Pakistani Army while China’s increasing militarization is fast becoming a standing concern for its South China Sea neighbours along with its preparation on the large India border and military bases in the Indian Ocean