China’s Numbers Can Boggle the Mind

Fellows Fall 2005

By Alan Bjerga

June 03, 2009

SHANGHAI, China -- The strongest reminders I've received in the past two weeks of how little I know about China come in how difficult it is to judge when one is in trouble and when one isn't.

For example: Last week during Gov. Kathleen Sebelius' trade mission to China, I missed a connection to be picked up to interview students working on Fort Hays State University degrees in Xinzheng City, Henan Province.

Positive I'd blown my only chance to get the story, I arrived at my hotel to find a driver and two assistants waiting to take my bags, handle my plane reservation out of the province and drive me one hour to the university campus.

On the other hand, I was certain I had lined up interviews at an aircraft plant further west, only to have three agreements fall through. I'm heading to that province this week anyway with an improvised Plan B, but Plan Bs are essential to making it in China.

As are Plan Cs and Plan Ds....

A giant among nations

The country's sheer numbers are mind-blowing, and they put some perspective on why China is what it is and where it's heading. Every year China must create 20 million jobs simply to keep employment stable. Four million of those jobs need to go to college graduates.

In comparison, last year the United States created 2.2 million new jobs -- its highest growth since 1999.

Many of China's new jobs are in manufacturing, the playing field on which Wichita competes. The average Chinese manufacturing worker made about 57 cents an hour, according to a U.S. analysis of Chinese economic data.

China's policy toward its own currency makes a difference; so does the nonexistence of Western-style unions or equivalent workplace safety and pollution standards in many factories.

But even if those things did exist, China would need to go an incredibly long way for its labor costs to match America's -- and the scary thing for the United States is, American labor costs would have to go just as far down for it to compete with China on that basis.

The simple fact is, as former Shanghai Mayor Xu Quangdi told Gov. Sebelius' Kansas delegation in China last week: China has an awful lot of people. When you have a lot of people, labor comes cheap. All sorts of jobs that in America are done by machines are done by human beings in China. Subway tickets are sold and collected by people. Public toilets have people on staff to hand out towels, even if the toilet itself is filthy by Western standards.

In such an environment, combined with all the other factors, 57 cents an hour is a plausible wage. And Americans lose jobs as a result.

An economic turnaround

Stemming that tide and turning it around was a theme throughout the Sebelius visit last week, and in some ways there's ample reason for hope. At the same time China is devouring jobs, its growing prosperity is devouring products at a faster rate than China itself can supply, creating opportunities for Kansas companies.

And some markets have yet to be tapped. The United States is home to about 300,000 aircraft of all types. China has about 800 jetliners and about 600 smaller craft. The country is going to need to buy a lot more of them -- especially business jets and general aviation aircraft -- before they'll have the industrial development capacity to do it on their own, assuming they ever want to.

This is the balance Kansas treads upon as it seeks out its future. Throughout her visit, Sebelius closed speeches by saying "This is my first visit to China, but it won't be my last." While no one expects -- or would want -- the governor to start racking up frequent-flyer miles to Beijing, the point's taken.

China is the biggest story in jobs and economics today. Is Kansas in trouble regarding China, or isn't it? That's what the state needs to figure out. That's why it needs to be there.