The Effect Of China's Rising Labor Cost On Advantages Of Exports

More than 30 years of reform and opening up leads to the transformation of China,from a closed economy to become a big trading nation.According to the statistics,from 1980 to 2015,China's share in world total exports has rose from 0.82%to 13.8%.Since 2009,China has become the world's biggest merchandise exporter.The continuous expansion of China's exports is the result of the abundant labor resources participating in the global production network and economic globalization.Over the past 30 years,through the introduction of foreign capital,advanced production factors like foreign technology and capital have been introduced into China,and combined with the domestic low-cost labor resources,land resources and other production factors,which leads to the large-scale gathering of international production in China,and jointly promote the rapid development of China's export trade,this is the main mechanism of forming process of China's export trade great-power status.However,in recent years,with the steady growth of the economy,China's labor costs rise year by year.According to China statistical yearbook,the average wage of employees in cities and towns 2015 is 62029yuan,which is 11.6 times of average wage of 5348yuan in 1995.At the same time,although in world merchandise exports trade,our country still ranks the first place,but after China's export growth rate reaching the peak of 35.39%in 2004,it began to decline,and negative growth of-2.94%appeared in 2015.Is decline of China's export growth rate the result of rising labor cost?How dose rising labor costs affect China's export advantage?It's the main problem to be discussed in the article.I mainly adopted the research methods of literature review,data analysis and empirical research to explore the effect of the rising labor costs in China's export advantage under circumstances of different trade patterns.First of all,I reviewed the related theories and literature about the effect of labor costs in the economic and trade development.Secondly,combining with the domestic and international situation,I collect the related data to do the longitudinal and transverse analysis of the current situation of China's labor costs respectively.From the current situation,China's labor costs have risen rapidly,and the growth of labor productivity has offset it to some extent,so China's unit labor cost gently swung first and then rose rapidly in recent years.From the point of international comparison,compared with the developed countries,China's unit labor costs remain great advantage,but compared with the emerging developing countries,the advantage is not obvious.Thirdly,I analyzed the cause of rising labor cost in China from economic development,the cost of living,population structure,rural surplus labor and policy factors.Finally,I use empirical method,with panel data of 31 provinces and cities in China,to learn the effect of rising labor costs in China in export advantage under different trade patterns and regionals.The results show that the rising labor costs weakened China's export advantage to some extent,but the effect is different with different trade patterns and regionals.In terms of the overall sample,the effect of rising labor costs in general exports is not significant,but the effect in processing export is significantly negative.In terms of the regional samples,in the eastern region,the general export is not significantly affected by the rising labor costs,but the effect on processing export is significantly negative,in the midwest region,the negative effect on general export and processing export are neither significant,and labor cost has the minimum effect on both terms of trade among the variables.