ABSTRACT
This chapter looks at the labour costs in the country and determines whether this is necessarily a bad thing. It also provides an overview of the response to increased labour costs by both Chinese companies and the government. While companies are increasingly outsourcing to deal with high labour costs, the government wants Chinese economy to move away from export-led growth to one where domestic consumption drives the nation forward. One of the priorities of the Chinese government, along with maintaining reasonable economic growth and reducing pollution, is to lessen inequality in country. Such a thing would not be possible if wages did not rise substantially. Rising wages in China have seen it overtaken by many countries as a source of cheap labour which has led to an increasing number of Chinese companies outsourcing. The chapter concludes that contrary to prevailing wisdom, rising labour costs has the potential to benefit the country as a whole; as such it should be welcomed.
