China Business Blog - Aggregated China Business Blogs
Aggregated China Business Blogs
Productivity not growing as costs climb
Aggregated Source: Shanghai Daily: Business

INVESTORS who moan about rising labor costs in emerging markets are actually complaining that productivity is not growing in tandem with the increasing costs, speakers said yesterday during a night chat of the Lujiazui Forum, adding that the goal is to boost productivity.

Harry Wu, a professor of economics at Hitotsubashi University and director of Economic Research at the Conference Board China Center, said the emerging markets should not fear the increase in labor costs, but should take the opportunity to improve productivity.

"Many investors complain about the rapidly rising labor costs in emerging markets, and threaten to relocate their investment to markets with lower prices," Wu told a panel discussion entitled New Challenges and New Impetus for Economic Growth in Emerging Economies.

"But what they really complain about is the comparative lowering of labor productivity with the rising labor costs."

To retain the investments, which are necessary for the economies of the emerging markets to grow, productivity needs to be raised via industrial upgrading by innovating technology, management and products, Wu said.

Meanwhile Stephen Green, an economist at Standard Chartered Bank, said emerging markets must pay close attention to the risk of a debt crisis.

"We are doing a study in China on debts of government, corporate and household," Green said.

"Surprisingly, the initial results show corporate debts in China have surpassed the alarming line and pose a big risk to the Chinese economy," he cautioned.

Original URL: Click here to visit original article
Copyright Shanghai Daily: Business