Wages In China

From a reader in Shenzhen, a Chinese export hub:

There's two issues with that China "wage" graph. The first is that it compares wages using PPP, purchasing power parity, which is a number adjusted for cost of living. While this is a fine chart to show the relative average buying power of Chinese vs. Vietnamese, it doesn't do anything to show the actual GDP per capita, which could potentially tell you something about wages ($3678 for China, $1060 for Vietnam). Why not just compare real wages, or even minimum wages?

The second issue is the assumption that wages are really all that important.

For a $600 iPhone 4 made in Shenzhen, less than $7 went to wages. What China has, and other countries listed don't, is a massive and recent investment in modern infrastructure and entire comprehensive regional supply chains. It's not just that the iPhone is assembled in Shenzhen, it's that most of the non-Foxconn chips inside it are manufactured nearby as well. China Law Blog recently did a post on this topic, showing how political stability and corruption in nearby competitors will likely ensure China's manufacturing dominance into the near future.

What annoys a lot of China watchers, especially those living and working here, are the little mistakes that add up when people without a lot of experience in China write about it, especially when they drop nuance make big points.

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