With the export industry in peril yet again, China’s government needs to focus on its assets back home, domestic consumption, tells business analyst Shaun Rein to the McClatchy Newspapers. Rising wages are needed to boost economic activity.
“This is hugely important,” said Shaun Rein, the managing director of China Market Research Group in Shanghai. “If it gets this wrong, the economy is going to stall. It’s a paradigm shift that everyone here recognizes needs to be done. If Europe’s economy collapses and exports (from China) get hit real hard, what’s going to happen to all the unemployed workers in China? The government wants to minimize the social instability risk that could happen.”…
Rein, whose book “The End of Cheap China,” comes out in March, says the government needs to improve access to health care, continue to hike the minimum wage — which it did in 22 of China’s provinces last year — and lower import tariffs so that products aren’t so expensive.
“China is no longer a cheap place to do business,” he said. “You cannot rely on the export sector at all. China has to see a shift anyway to service and higher-end manufacturing,” jobs with higher salaries. “Right now, manufacturing is killing the country. Pollution is high. They need a healthier economy and environment.”
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