Why is Chinese labor so cheap?

The Chinese government makes it easier for factories to employ large numbers of workers by keeping the employers costs low. This is by reducing leases, charges fo land use, electricity, permits, etc. Labor’s wage is decided by labor market economics.

Does China have poor infrastructure?

In brief, the single-source financing model that underpins government-led infrastructure development is not sustainable, the quality of urban infrastructure is poor, and despite the vigor of China’s infrastructure-building efforts, infrastructure companies now face overcapacity challenges similar to those in developed …

What does the Chinese government provide to the workers?

The governments provide small loans and give interest subsidies to support the unemployed to start up their own businesses, and support SME’s development in order to expand employment.

Is China building infrastructure in Africa?

In 2018, Chinese funding made up a quarter of the more than $100 billion committed towards infrastructure development in Africa; the year before, Chinese firms won an estimated 50 percent of the continent’s engineering, procurement, and construction contracts.

Why do companies move production to China?

One of the reasons companies manufacture their products in China is because of the abundance of lower-wage workers available in the country. China has been accused of artificially depressing the value of its currency in order to keep the price of its goods lower than those produced by U.S. competitors.

Does China still have a labor cost advantage?

In recent years wages in China have been rising and the yuan has appreciated, potentially eroding China’s cost advantage in manufactures. Between 1998 and 2003 China’s unit labor costs fell, but since 2003 they have increased both absolutely and relative to US unit labor costs.

How does China pay for its infrastructure?

Although it is relatively normal that large scale infrastructure projects are financed by central government and smaller projects by local government, the fiscal structure of the Chinese Budget Law means that local governments are prohibited from engaging in borrowing from banks or running budget deficits.

Does China have Labour laws?

China’s Labor Contract Law states that employees should not work more than eight hours a day and no more than 44 hours a week, on average. Only under exceptional circumstances can employers ask their employees to work for more than one additional hour.

Do Chinese workers have rights?

Most workers do not see it as a reliable advocate for their rights. Law fails to protect workers’ rights in China – Under Chinese law, workers are technically guaranteed the right to a 40-hour work week with overtime pay, a minimum wage and social security benefits. But enforcement is down to the local governments.

Why is China building ports in Africa?

It said that “forming the backbone of China’s ‘Maritime Silk Road’, investments in African ports provide a gateway to the region’s trade and economic development, empower China with political leverage and clout on the continent, and provide a foothold for People’s Liberation Army Navy activities”.

What are two examples of infrastructure projects that China is supporting in an African country?

The Congo River Dam in the Republic of Congo and Bui Dam in Ghana, which are currently under construction, are being financed by the China Ex-Im Bank loans backed by guarantees of crude oil in case of the Congo River Dam, and cocoa, in case of Bui Dam.

How does China’s government help other countries build infrastructure?

“One approach adopted by the Chinese Government is lending [those nations] money, which allows them to build infrastructure using Chinese products and Chinese firms,” said Sun. “This actually yields a huge amount of business for Chinese companies, especially state-owned enterprises.”

How can foreign companies set up local production in China?

Any foreign company looking to set up local production in China should first consult the China foreign investment catalog, which divides foreign investment projects into ‘encouraged’, ‘restricted’ and ‘prohibited’ categories.

Why is it so difficult to do business in China?

Doing business in China can be a difficult and contentious proposition for companies in many countries. Yet even with charges of intellectual property theft, forced partnerships and tight restrictions on doing business, China continues to attract foreign capital.

Why do companies invest in China?

Despite the institutional restrictions on investment, with access to more than 1.3 billion people, many of them potential consumers, and a flourishing GDP, China represents a global market opportunity that multinational companies around the world continue to exploit. [ You’re smart and curious about the world.