Surging Wages in China Are Good News for the World

Surging wages for manufacturing staff in places like Shenzhen and increased worker discontent in China looks to me like good news for the world.  According to the New York Times, workers are demanding, and getting, raises of as much as 50% in China's major manufacturing regions like Shenzhen (link).

Simple electronics assembly is one of the first businesses to boom in most export-driven economies.  It helped lift up Japan and Korea in the 1970s and 1980s and it has been a huge engine of growth in China in the 1990s through to today.  As wages rise in coastal China, it will push manufacturing inland to more impoverished areas, bringing with it higher incomes (relatively) and huge capital investments.

Eventually, this wave of low cost manufacturing will work it's way through across Asia and into Africa.  Manufacturers have largely avoided the continent because the cost and difficulty of doing business in countries with very poor governance and bad infrastructure.  Eventually, however, they may have little choice and when that happens, it could have a radical effect on region itself.

Every big wave of industrialization leaves behind a richer and better off country that moves up the ladder economically.  Even if Japan is struggling today, it's still a far cry from the country that existed before the rise of it's manufacturing industry.  With it's cheap components and minimal capital requirements, electronics is always the first industry to move when wages rise, and so it's often at the leading edge of economic growth.

The Seagate Factory in Wuxi, from Robert Scoble, CC