China should not relent in its efforts to develop its labor-intensive manufacturing sector.
The value of exports from China's labor-intensive manufacturing industries suffered a slight decline in February, in comparison to a steep decline in exports of mechanical and electrical products and bulk commodities. Because of a higher tax rebate policy for the labor-intensive manufacturing sector, garment exports fell by only 11 percent in February, and shoe and toy exports dropped by only 2.3 percent and 17.1 percent respectively. However, the export of mechanical and electric products, fertilizer and steel products declined by 21.8 percent, 55.4 percent and 52 percent respectively from the same month last year.
China's labor-intensive products have long been exported to developed countries, while its mechanical and electrical and high-tech products have been mainly exported to developing ones. The US and European markets still have a strong demand for China's clothing, shoes, toys and other daily necessities despite the ongoing global financial crisis.
There have been domestic debates over China's labor-intensive manufacturing sector, which is low tech and high cost. Some have called for the gradual elimination of this sector in an increasingly competitive international market.
Many of China's industries, especially labor-intensive ones, still lead in global market shares. Given that one-third of the country's rural labor force has not been fully employed, China should still try to develop and build up its labor-intensive manufacturing sectors, which have long enjoyed an advantage over that of other countries.
A powerful labor-intensive sector will help sharpen the country's edge in the global market. These sectors will offer more employment opportunities for poor and unskilled workers, as Justin Yifu Lin, vice-president of the World Bank, said.
The economic miracle achieved by the East Asian economies has been bolstered in large part by their manufacturing sectors.
(China Daily 03/23/2009 page2)