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'The Coming Collapse of China' author Gordon Chang weighs in on the ripple effect of wage hikes across Asia.
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Bernard get ready your wallet is about to feel the -- -- China with some wage hikes and now we're seeing in and other parts of Asia as well.
-- so far this year just this year some Chinese workers have gotten raises of almost 14%.
And then some Indonesian workers have gotten even bigger pay raises up to 20% so our question is going to be what does all this mean.
We all buy things that are made in this part of the world -- get your high tech gadgets lot of them are made in China does that mean you pay more Gordon Chang is the author of the coming collapse of China joins us now to talk about that and more and is that the bottom line for us as Americans that.
Finally people started to get paid a little bit in in China of course I'm sure they -- -- ways to go but does that mean for us we pay more.
What would -- We we probably will so for instance Foxconn which is the world's largest contract manufacture.
Makes all of Apple's stuff or virtually all of -- -- and HP and Dell and all the rest of it that's the company about just everybody knows a lot of controversy surrounding it now because human rights.
Accusations and alleged violations and what have all the suicides of a couple of years ago.
Well they just announced wage increases of sixteen to 25%.
Those are on top of all the wage increases of last year.
So -- currently what's going on at Foxconn is that their price base is much higher.
Which means that Apple's gonna pass that a law now some manufacturers won't pass -- along like Dell for instance if there in sort of a commodity business.
But nonetheless that's an upward pressure on prices are big picture how long is it gonna take for the dynamic that exists you look at the wage hikes that have happened across.
Asia negative ripple effect of what's you're describing in China how long is again it's the take for this whole dynamic -- -- change.
Forty even see that you don't even be altered significantly where we would pay more for products because you know for years obviously American jobs have been lost overseas.
But you make things for next to nothing in Asia.
Didn't get a little bit of a race that still that there's still paying workers there are a lot less -- -- -- -- -- here for example or somewhere else you have but our -- manufacturers are by and large very very efficient.
You -- what we sort of have a disadvantage on wage rates we have advantage on efficiency right so.
You know this really is good news for American manufacturers because it -- manufacturing here attractive that's -- I guess I'm getting at is that you see the political candidates now that we're in the season 2012 election come -- and say hey we can bring some of these manufacturing jobs back.
Lot of people on the other side go back to the -- Steve Jobs line from the book that Walter Isaacson -- where these if these jobs are gone and they're not coming back effectively is what he said who should we believe.
Well a little bit of both you know some manufacturing gonna come back to the US.
A lot of it's gonna go to Vietnam and bomber -- dashed in Indonesia and all these countries on China's periphery because.
There wage rates are a lot lower and they're not enforcing environmental rules in China what is really driving manufactured bonkers is not only the wage increases.
But the Chinese people actually want clean air you know imagine that so that that's really a big factor in manufacturers' thinking about China as a as a base for their operations this is a real balancing act for the Chinese Government and they are also -- a transition.
Year over the next year year plots you'll -- new leadership.
In China with the current a leadership group Hu Jintao and Wen Jiabao effectively lead the country with seven others they'll be moving out new leadership group.
Moves -- so they have to balance all of this.
Their own concerns at home.
With you know the idea that they wanna keep the government of the economy growing but they don't -- to -- too quickly and -- -- a -- one -- the other can do it.
Well I don't know you know if you look at January and February's numbers it shows an economy growing in the low single digits.
That's a sudden deceleration.
From last quarter which was eight point 9% officially.
And nine point 2% for last year so you're seeing this momentum pick up on the downside.
And China's going to zero growth economy and we don't know if China can sort of survive that because there -- meant for high growth but I don't see anything in those numbers and maybe I'm not -- and there's something there that would suggest to me that this thing is gonna fall apart -- we're gonna have this huge hard landing in China which I noticed.
If -- that you wrote a book about the kill caught coming collapse of China you've been negative on China for a long time and I don't know that the city to -- it suggests that it's just gonna.
Blow up in our faces or their faces well you -- -- you have right now is that the government is not stimulating the economy they have the tools sort of to do this but they're not doing it because they've got this political transition that you mention.
Which is really creating a lot of turmoil inside the Communist Party -- -- signing on -- that they feel they don't have to do that.
Well I think is that they're just sort of paralyzed right now it's sort of they're not paying attention to the economy because.
You know people are losing their party posts and purges and you have these these warnings about trying to going back to another cultural revolution from the premiere last week this is incredible stuff.
Gordon Chang always -- on China and great to have you on today appreciate it thank you time to get.
