10/10/2005, 00.00
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No more cheap labour in China on the way

Studies indicate the rural exodus is ending. This will have important repercussions on the country's economy which relies on cheap labour for 70 per cent of its growth.

Beijing (AsiaNews/SCMP) – By 2011 China won't have much cheap labour left, reported Cai Fang,  director of Chinese Academy of Social Sciences' population institute, in a study published on October 9.

His study indicated that for wages to remain low the influx to the cities of rural workers must continue, and this is going to end in a few years. In 2004, for example, the scale of increase in migrant labour was 74 per cent below that of 2003. The trend will eventually mean that the workforce will stop increasing by 2011 and start to contract by 2021.

According to a separate study by the Academy, China's cheap labour cost has contributed to almost 70 per cent of its economic growth, with about 28 per cent driven by capital investment and 3 per cent by advancements in technology and efficiency.

At present, there are still 150 million surplus workers in rural areas, according to the Ministry of Agriculture. But in another study, Han Jun, director of the Academy's Rural Development Institute, found that 20 per cent of villages were running out of surplus workers. This is especially true in some age groups, especially the 16 to 25 age group, which is in fact decreasing, particularly in the central region.

In Xinyang, a city in Henan province, about 1.86 million workers have been exported to urban areas, 80 per cent of them young people. In northeast Jilin province, 40 per cent of its 6.5 million rural workers were exported in 2004 alone.

The forecast comes at the same time as the Fifth Plenum of the Communist Party's 16th Central Committee opened on Saturday. Its task is to endorse the 11th Five Year Plan, the blueprint for the country's development between 2006 and 2010. Issues it will address include reviewing the country's approach to economic development and agricultural problems.

In a separate report, Zhu Baoliang, an expert with the State Information Centre, was quoted as saying that the new Five-Year Plan will also review the country's social security system. It will also increase social investment in rural as well as the central and western regions.

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