Europe is now China’s sweatshop

http://www.zerohedge.com/news/europe-now-chinas-sweatshop-great-wall-starts-building-cars-bulgaria

When it comes to labor-wage parity, nowhere has this topic been more debated than in the context of China and the US. Specifically, with US wages declining consistently for the past 3 years despite commodity price inflation spiking with a 2-3 month lag following every coordinated central bank printing episode (such as the one we are experiencing now), many have proffered their predictions as to when Chinese secular inflation would make wage pay equivalent on both sides of the Pacific, and stop the exporting of jobs from the US to China (a good discussion on the topic can be found in “With China Forecast To Reach Wage Parity With The US In Five Years, Is A New Manufacturing Golden Age Coming To The US?”). And while labor equivalency between China and the US likely still has a ways to go, we have now crossed a critical Rubicon, as Chinese and European wages, at least in one part of European Union, have caught up. Net result, as Spiegel reports, carmaker “Great Wall this week became the first Chinese automobile manufacturer to open an automobile assembly plant inside the European Union in the latest move suggesting the country’s carmakers are seeking to establish a beachhead into the European market.” Yes, that’s right: it is now cheaper for China to make cars in the European Union: “It used to be that European carmakers opened plants to assemble their cars in China. Now the Chinese have turned the tables with the opening of their first factory in Bulgaria, an EU country with low labor costs and taxes. Increasingly, Chinese carmakers are setting their sights on the European and American automobile markets.” The ramifications of this landmark development are massive for virtually every aspect of the economy: for domestic labor migration, for inflation, for the trade balance, and certainly for US workers.

So the real question is if Chinese wages can no longer compete with those in a poor EU member, just how high are they? And how long before China, for so many years a happy mercantilist importer of Bernanke’s monetary inflation courtesy of its currency peg, is no longer competitive with ever growing parts of the EU, and then America? Does this mean that China’s cheap labor force has pleateaued and the labor migration of peasants moving from the periphery to the cities no longer provides cheap labor? This was the topic of an extended analysis by SocGen from early January (posted here), of which the salient chart is presented below. Today’s news will certainly force everyone to have a second long, hard look at the chart in the top left as it means that the Chinese labor force may indeed have topped out.

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thanks to rev17 for the link..

oh the irony..i have said this for a while..when the west sees their wages being less than china all hell will break loose..

401

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~ by seeker401 on March 19, 2012.

2 Responses to “Europe is now China’s sweatshop”

  1. Jim Sinclair’s Commentary

    Knowledge is power. Barack Obama signs an executive order this past Friday in preparation of national chaos.

    Office of the Press Secretary
    For Immediate Release
    March 16, 2012
    Executive Order — National Defense Resources Preparedness

    EXECUTIVE ORDER

    NATIONAL DEFENSE RESOURCES PREPAREDNESS

    By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061 et seq.), and section 301 of title 3, United States Code, and as Commander in Chief of the Armed Forces of the United States, it is hereby ordered as follows:

    PART I – PURPOSE, POLICY, AND IMPLEMENTATION

    Section 101. Purpose. This order delegates authorities and addresses national defense resource policies and programs under the Defense Production Act of 1950, as amended (the “Act”).

    Sec. 102. Policy. The United States must have an industrial and technological base capable of meeting national defenserequirements and capable of contributing to the technological superiority of its national defense equipment in peacetime and in times of national emergency. The domestic industrial and technological base is the foundation for national defense preparedness. The authorities provided in the Act shall be used to strengthen this base and to ensure it is capable of responding to the national defense needs of the United States.

    Sec. 103. General Functions. Executive departments and agencies (agencies) responsible for plans and programs relating to national defense (as defined in section 801(j) of this order), or for resources and services needed to support such plans and programs, shall:

    More…
    .http://www.jsmineset.com/

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