Average isn’t over in China

Good news:

In the same week that international educators are debating the comparative merits of global school systems—and whether China’s PISA scores are overhyped—a new report from China Economic Quarterly sheds light on an unintended consequence of China’s recent push to expand higher education.

The annual supply of fresh college graduates far exceeds the number of white-collar positions available in China. Meanwhile a dwindling pool of young people willing to work in Chinese factories has driven up assembly-line wages. The result, conclude GK Dragonomics analysts Andrew Batson and Thomas Gatley, is an unexpected narrowing of China’s worryingly high level of income inequality.

Over the past decade, China has rapidly expanded access to higher education. University enrollment tripled from 2000 to 2010, from 2.2 million to 6.6 million students. Unfortunately, job creation didn’t keep pace. According to survey results from China’s labor ministry obtained by China Economic Quarterly, there were 100 job applicants in mid-2013 for every 80 white-collar jobs in China. For blue-collar positions, however, the scenario was reversed: There were 100 applicants for every 125 slots in China.

Given the relative oversupply of college graduates and undersupply of lower-skilled workers in China, blue-collar wages have risen more quickly than white-collar wages for the past four years. Since 2009, professional wages have climbed 12 percent annually, on average. In the same period, average wages in manufacturing, agriculture, and construction have risen 14 percent annually.

The upshot? “All the data show households with humbler jobs and lower incomes enjoying faster income growth than those with fancier jobs and higher incomes,” observe Batson and Gatley. “China’s income inequality has been quietly getting better.”

Someone tell the Pope to stop being so Euro-centric.  Markets are making the world a better place, a more equal place.  But the world still needs to become much more market-oriented, as there are still lots of very poor people.


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11 Responses to “Average isn’t over in China”

  1. Gravatar of TallDave TallDave
    6. December 2013 at 23:56

    China’s worryingly high level of income inequality.

    Gee, if only they were still true Communists, they could be more equal.

    They shouldn’t measure income inequality, they should measure coercion — these high II levels are only problematic when we’re talking about kleptrocracies. It’s insane to think China isn’t a vastly improved country under the current crop of crony capitalist oligarchs — they are a huge upgrade from the Maoist basket-cases.

  2. Gravatar of Brett Brett
    7. December 2013 at 00:04

    Honestly, the whole “Oh no, the Chinese college graduates can’t find employment!” thing is over-hyped. If you look at the finer details in the stories, they usually point out that there are plenty of jobs in the private sector, but that a bunch of them are holding out for “iron rice bowl” positions with the government and State Owned Enterprises. They’ll eventually give up and go get jobs elsewhere.

  3. Gravatar of Saturos Saturos
    7. December 2013 at 02:37

    But shouldn’t we credit government intervention in education for this, not markets?

  4. Gravatar of Saturos Saturos
    7. December 2013 at 02:38

    Brett, can you not get an iron rice bowl if you’ve already accepted a contract from the private sector?

  5. Gravatar of Benjamin Cole Benjamin Cole
    7. December 2013 at 03:14

    Would blue collar wages have also risen in the USA in the last 30 years if we had not accepted 20-30 million hardworking immigrants, illegal or otherwise?

  6. Gravatar of Dustin Dustin
    7. December 2013 at 04:54

    Benjamin,
    Nope. If we had not accepted lower-wage-accepting-immigrants, price pressures would have driven more outsourcing and growing unemployment in the US.

  7. Gravatar of Saturos Saturos
    7. December 2013 at 05:26

    So the Fed is making tapery noises again (HT Miles Kimball on Twitter) http://online.wsj.com/news/articles/SB10001424052702303722104579242614008515066

  8. Gravatar of ssumner ssumner
    7. December 2013 at 06:52

    TallDave and Brett, Good points.

    Saturos, Of course the US has the same policy.

  9. Gravatar of Brian Donohue Brian Donohue
    7. December 2013 at 13:16

    Perhaps China is going through a phase similar to what the West saw in the 1950s and 1960s.

  10. Gravatar of JohnB JohnB
    7. December 2013 at 21:28

    China’s scores are overhyped. From what I’ve seen in graduate school, the international students from China are ridiculous cheaters. American-born Chinese are not nearly as sneaky from what I have seen. I think the emphasis on test scores is so high in China and South Korea that cheating on exams gets a blind eye or tacit encouragement. Parents and teachers put them under a lot of pressure to perform.

  11. Gravatar of ssumner ssumner
    8. December 2013 at 07:56

    Brian, That might be part of it.

    John, If we are going to rely on casual empiricism, it’s worth noting that Asian students who come to America are shocked at how little math American students know. The stuff we teach in college they learned in high school.

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