Is China's economy collapsing? This is a must see short film.
The factories are closing at a rate alarming the Chinese government. 20 million Chinese workers lost their jobs this year alone. In addition, 5 million Chinese college graduates this year cannot find jobs.
In the manufacturing sector, town after town have nothing but deserted factories and empty streets. How did this all come about.
U.S. manufacturers found that because of the cheaper labor and workers willing to live 12 to a small dorm in China, they could boost profits by closing the manufacturing plants in the U.S. and move production to China. They could then export the goods back to the U.S. for sale to the U.S. consumer. As a result, the Chinese economy was built almost exclusively on the U.S. consumer. Meanwhile, the U.S. economy was built on this consumer spending boosted by asset inflation, which was only really paper wealth.
The U.S. economy, during this period of manufacturng outsourcing, had been built on "asset inflation" and the resulting consumer spending. When the asset bubbles burst and the U.S. economy tanked, and U.S. consumers had nothing more to spend, it was inevitable this would affect the Chinese economy.
The question posed at the end is interesting:
If China is able to spur it's own consumer spending for it's products manufactured, then it can survive by restarting production and getting people back to work.
However, for this to work, the salaries of the workers would have to rise substantially to allow them to afford the very products they make.
If this happens, would this cause the cost of importing Chinese manufactured goods to rise in the U.S.? Would this then spur manufacturing plants and jobs to return to the U.S?