Empirical Research On Evolution Of The Cost Competitive Advantage In Chinese Manufacturing Industry-Based On Unit Labor Cost

Abundant and cheap labor force has been considered as comparative advantage during China's economic development, low labor costs support the rapid development of China's economy. Currently, phenomena such as labor costs, labor shortage, collapse of a large number of small and medium enterprises cause peoples's concern on labor cost in China's manufacturing. Most of rearch in this aspect at the present time from the angle of wage, and lack of study on other factors which effect the comparative advantage as well. Inevitablely, some limitation exist in those research, and then the conclusions diverge from the truth too, so it is particular necessary to make further study on this aspect.In this paper, the writer adopt the concept of"unit labor cost"(ULC)which introdced in item comparative of output and productivity of netherland(sICOP), to check three indexes closely related to ULC: labor cost, productivity and exchange rate and their alteration, taking advantage of non-parametric DEA, the Shift-share methods and cointegration Error models to make further empirical research on competitive advantage of labor cost in China and its developing tendency. Based on 20 years of time series data of China cleaned up, the writer made a deep emperical study on labor cost, productivity, exchange rate and their developing tendency , analyzed their alteration situation and competitive advantage of China's manufacturing in international manufacturing; via the decomposition of productivity and alteration of labor cost, the writer explore the dynamic comparative advantage of labor cost from still situation, and important competitive advantage transforming factor, then get an new important conclusion.Through emperical research of effect factor on productivity, the write explored out that quality advantage(not quantity advantage) and efficiency advantage was the key point and stratage decision on maintaining and upgrading the china's manufacturing comparative advantag. Further more, introducing and independent R&Dand innovation , reducing the difference of technology among different industries, offering appropriate human capitical support system and effective management and knowledge spillover to increase productivity , should be consided as implementation method to maintain the advantage.which will provide the upgrading and strengthening measures and strategic choice for the relevant departments .After further study, the writer found, ULC of China's manufacturing and its relative indicator show that the labor cost advantage is increasing with decreasing tendency of ULC, due to ascend range of productivity higher than labor cost, though labor cost of china's manufacturing is increasing continuously and price advantage of labor is decreasing, which indicate that the ULC is decreasing; further review on exchange rate, deduct its negative effect , we found that cost and price advantage of exportant products still be maintained and increased. Hereby, later, cost competitive advantage of manufacturing in China should be based on high level productivity. Accord to the theory of factor price,follow the economy growth, labore wage level will be increased inevitably. None but upgrade of productivity could set out negative effect of increasment of labor cost. In order to upgrade productivity and quality of labor, based on exogenous comparative advantage and foreign direct investment , some efforts from technical progress, technical efficiency, capital deepening, human capital should be made to create endogenesis comparative advantage, maintain an enhance to the labor competitive advantage.