Has China Reached the Lewis Turning Point Yet? Some Context

Kam Wing Chan, June 16, 2010

Recently, the issues of labor shortages in China’s export sector and the perhaps imminent arrival at the “Lewis turning point” have received a lot of attention.  I have written on this recently to provide a context, which is often overlooked. Let me summarize the three points in my paper published early last year (Kam Wing Chan, 2009. “Population, Migration and the Lewis Turning Point in China,” in Cai Fang and Du Yang (eds.), The China Population and Labor Yearbook, Volume 1: The Approaching Lewis Turning Point and Its Policy Implications, Leiden, Netherlands: Brill, pp.xix-xli. The relevant pages of that paper are attached herewith for those interested.):

a)     The timing of arrival at the turning point is highly dependent on the rate of China’s economic growth, especially the performance of its export sector.

b)     China’s large pool of rural surplus labor is mainly a function of its recent demographic history and, equally important, the existence of a two-tier system of citizens, enforced by the hukou system.

c)      The labor employed in the export industry (and currently in short supply) falls overwhelmingly in a highly select age group, namely, from age 16 to 30.  There is still an abundance of rural surplus labor in the older age groups.

A new factor also to consider this year: since last year, the government has launched many public works projects, as part of the stimulus package to counter the global financial crisis. These projects have also employed millions of migrant workers in the central and western provinces.