Page 7 - The South China Business Journal
P. 7
Already the world’s
second largest national
economy, China’s
economy is not done
growing either.

companies cannot afford to ignore the world’s • Human resources and infrastructure
second largest economy.
China continues to offer a unique and
In 2021, China’s GDP grew by 8.1 percent irreplaceable environment for manufacturing,
to reach US$18 trillion. With this growth, with its vast labor pool, high quality
China’s economy surpassed that of the entire infrastructure, and other advantages. While much
27-country European Union, which stood at has been made of rising labor costs in China,
US$15.73 trillion. these costs are often offset by factors such as
worker productivity, reliable logistics, and ease of
With a population of 1.4 billion, China’s GDP per in-country sourcing.
capita was US$12,551 in 2021, about six times
lower than that of the US. While China is not For example, in 2020, the average hourly cost for
guaranteed to eventually achieve GDP per capita labor in the manufacturing sector was US$6.50
on par with the US, the gap shows that there is in China, compared to US$4.82 in Mexico and
still significant room for economic activity and US$2.99 in Vietnam, two popular alternatives
household wealth to continue to grow before for manufacturing. However, while Vietnam’s
leveling off at a saturation point. labor costs in manufacturing are less than half
of China’s, Vietnam’s productivity per worker is
The British Consultancy Centre for Economics about one-third of productivity levels in China.
and Business Research (CEBR) projects China’s
economy to continue growing at 5.7 percent per The breadth of China’s labor pool means that the
year through 2025 and then 4.7 percent to 2030, country’s human resources are highly adaptable
at which point it will surpass the US to become to business needs, as companies will be able to
the world’s largest economy. Although these find workers and technical specialists experienced
growth rates are slower than in the past, they come in a wide variety of fields.
from a higher base and reflect China’s transition
towards becoming a high-income country. Further, China’s labor market is becoming an
asset not just for its size and cost efficiency,
“Workers in China’s but for the quality of education. For instance,
the Times Higher Education World University
manufacturing sector Rankings had 10 Chinese universities in its
tend to be more 2022 top 200 list – the most ever – including two
experienced, more in the top 20.
educated, and better
resourced than in Overall, China was the fourth most represented
competing countries, country in the complete rankings, with 97
often making China universities, behind only the US, Japan, and the
a more cost-efficient UK. The improving quality of China’s universities
option despite slightly is reflective of the next generation of Chinese
higher wages. workers that is more educated and competitive
than previous ones.

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