Anticipating India’s rise as the next workshop-of-the world, a leading Chinese daily affiliated with the Communist Party of China (CPC) is strongly advocating that Beijing should rapidly shift to high-end manufacturing, and take advantage of the low labour costs that are still available in its less developed zones.
An op-ed in the Global Times on Wednesday highlighted the likelihood of Apple shifting manufacturing to India—as well as its larger implications for China.
“If Apple expands in India, more global tech giants may follow suit and China is likely to see a further transfer of the supply chain given India's abundant supply of working-age labour and low labor costs.”
It added: “China cannot afford to lose manufacturing jobs while it has not made a major breakthrough in upgrading its industry and while (US President-elect Donald) Trump plans to draw manufacturing jobs back home.”
The daily points out that India’s low cost labour give it an unrivaled edge for integrating with the global supply chain. “Industrial competition between China and India comes down to the labour force, where costs and the level of skills are two major factors that influence business decisions. Although China has an edge having nurtured skilled workers over past decades, a majority of Indian states have an absolute labour cost advantage over China. Today, labour cost is still a significant part of the complicated equation for business success.”
In order to “plug in the hole if manufacturers continue to move elsewhere,” the op-ed advocated that China should take advantage of the low labour costs in its central and western regions. “Certainly China has options. The country's central and western regions, with cheaper labour, could become an investment haven for manufacturers as these regions need capital to boost the local economy and are certainly ready to offer preferential policies to attract investment. It will be easier for these areas to replicate the success of the country's eastern coastal region as a manufacturing hub.”
The article also proposed accelerating the “manufacturing upgrade” through restructuring and reorganisation of technologies, talents, capital and other resources. “These options could create investment opportunities and generate jobs. Perhaps it is time for China to make it happen soon as it faces a battle to retain manufacturing competitiveness from all fronts.”
