The secret of China's competitiveness

[Jurriaan Bendien <bendien@xxxxxxxxxxxx>]

The average Chinese worker currently gets paid about US$900-US$1000 (per
capita GDP is estimated at US$791, total GDP is $991 billion; operating
surplus averages about 22 percent, which UBS Warburg thinks too low, it's
lower than the USA), but the average output per worker is about US$6800
(this is higher than Indian and Indonesian workers) and the average total
labour cost per product unit is said to be about only three-quarters of that
in the USA. The average Chinese gross wage is on average about 3.2 percent
of the average American gross wage. The corporate tax rate in China is 33
percent and in the USA 40 percent.

In 2001, the pre-tax annual average rate of profit on stockholders equity in
the USA in 2001 was 15.68 percent (Canada 15.2 percent)  and the after-tax
annual US average rate of profit was 9.29 percent. The pre-tax annual
average rate of profit on total assets in the USA in 2001 was 5.76 percent
and the after-tax annual average rate of profit was 3.41 percent.

I cannot find equivalent figures for China, but the average pre-tax return
on assets of all listed companies in 2001 was about 13 percent and about
about 8 percent for manufacturing companies.

These rates fell somewhat after the terrorist attacks on the World Trade
Towers and the Pentagon.

So the secret of Chinese competitiveness is a higher rate of exploitation of
labour power, a higher intensity, efficiency and productivity of labour, the
value of Chinese labour power is lower, and the average rate of after-tax
profit on equity and assets is significantly higher.

Jurriaan