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Rich Tehrani

[September 23, 2004]

Is China the Next Japan?

BY RICH TEHRANI


Americans feared the Japanese in the 1980s, as they were taking away a large number of jobs and were able to generate products less expensively than the United States. The standard of living quickly skyrocketed in Japan and the outflow of jobs and trade imbalance wasn’t as bad as we first thought.


 

My friends who understand international economics better than I do tell me that the same will happen with India and China. I am concerned that it will take an immense about of time to improve the standard of living for billions of people while US jobs disappear. Today’s Wall Street Journal article titled China’s Workers Demand Perks, Better Salaries, focuses on a group of senior auditors at the PriceWaterhouseCoopers Beijing office, who complained about excessive overtime, working extended hours, some until 2 AM during the week and on weekends, yet weren’t financially compensated in the same fashion as the junior auditors. The company eventually conceded, granting overtime pay with bonuses.

 

The article goes on to discuss how professionals in China are aspiring to a more middle-class lifestyle, which, consequently, is good news for those companies competing with the Chinese. Still, the salaries are amazingly low. Multinational companies pay a receptionist about $5,000 per year while an engineer will receive $42,000. State run companies pay anywhere from $600 to $2,400 per year. These numbers seem out of whack, but I trust the integrity of WSJ’s editorial here.

 

It is possible, then, that the trend towards higher salaries and an increased standard of living is beginning to take place. I am told that India call center outsourcers are already outsourcing their low paying jobs to the Philippines. It seems that as the world is connected to the Internet, the global standard of living will also increase in near real-time.

 

If this happens, America and other countries will benefit. We will sell more microprocessors, operating systems, sweaters, cars, jewelry, etc. The humanitarian side of me is all for the standard of living increasing in India and China, and the capitalist in me hopes for the same.

 

 

Rich Tehrani is TMC's president. He welcomes your comments. Participate in our forums.

 

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