A Changing Chinese Economy Has Resulted in Significant Labor Shortages

A changing Chinese economy has resulted in significant labor shortages. Factories continue to expand as
China’s economy grows, but the number of uneducated workers is declining and the population of young
people is leveling off. Add to these an increased number of people remaining inland, and this leaves coastal
regions which specialize in factory production and exports with a large number of job openings.
The labor shortages are resulting in wage increases, pushing up costs on Chinese -made products. This could
make China less competitive in global markets. Anticipating a continuation of rising costs for Chinese
manufacturing, international manufacturers are already looking at moving factories to countries with lower
costs.
The increase in wages is also fueling a growing Chinese middle class. Minimum wages in big cities have
grown roughly 25% over the past three years, and infrastructure, housing and retail projects have started to
develop in more rural areas. The number of people going to college has also increased significantly. In 2005,
over 14 million people enrolled in Chinese colleges and universities, an increase of more than 250% since
1999.
Labor shortages and the resulting cost and wage increases may prompt even more changes in China. Labor
conditions and worker benefits have already started to improve, and increased manufacturing costs could
cause a shift away from the production of lower-end products. Rising wages could create an increased
demand for imports, and factories have started moving inland, where labor is more readily available
-This Application reinforces the basic definition of economics, which is the

A) possible or feasible combinations of an economyʹs production options.
B) study of choices made by people when there is scarcity.
C) arrangement that allows buyers and sellers to exchange things.
D) forces that affect economic activity and predict the consequences of alternative actions.