China is not experiencing “an exodus of businesses” as some have claimed, because it’s perfectly normal for businesses to move plants and invest overseas as the country’s manufacturing continues to upgrade, Yuan Da, spokesperson for the National Development and Reform Commission said at an October press conference.
Writing for the Economic Daily, columnist Qiao Ruiqing agreed, adding the phenomenon proves the remarkable success in China’s economic transformation.
China has fast-tracked its economy ever since the transfer of labor-intensive industries in the early 1980s. Yet its labor value and costs have grown in tandem with its economy, Qiao said. Because of the limited economies of China’s less developed central and western regions, the wish for internal transfer has largely fallen flat, he noted.
While some worry about China losing its population dividend or resource dividend, the country has been steadily upgrading its economy, he argued. And the pace has only sped up after supply-side structural reform was introduced in 2015, with many local governments taking steps to optimize the industrial mix.
The transfer of low-end processing and manufacturing has become part of an inevitable trend, he said. A labor-dominated industrial structure is certain to give way to capital, and then knowledge.
While the transfer could be painful for some regions, not only will it free up some workers to move to service sectors, but also ease the pressure on land, resources and other factors in some places, making it conducive to high-quality economic development, he concluded.
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