China and the Great Doubling: Racing to the Top or Bottom of Global Labour Standards?
| DOI | http://doi.org/10.1111/1758-5899.12252 |
| Date | 01 February 2016 |
| Author | Edward Whitfield |
| Published date | 01 February 2016 |
China and the Great Doubling: Racing to the
Top or Bottom of Global Labour Standards?
Edward Whitfield
Independent Researcher
Abstract
This article draws from the wealth of literature surrounding China’s role in global markets. In particular it focuses on the
debate regarding China’s Lewis turning point and burgeoning market share. This article constructs a theoretical framework
surrounding globalisation theory and Richard Freeman’s‘great doubling’thesis, and assesses the implications of China’s
reserve-labour surplus for global labour standards. It reviews a wide range of the literature on related topics, assessing the
validity of the data therein. Market signals suggesting the depletion of China’s reserve-labour surplus are distorted due to
state policy known as hukou, which itself may cause China’s Lewis turning point to be pushed further into the future. There is
evidence that China can catch up with advanced economies in terms of capital intensive production (although they remain
some way from doing so) and that China’s crowding out of neighbouring economies’market shares might be seen more
accurately as redirection, rather than outright displacement. Finally, this article highlights evidence of a race to the bottom.
Policy Implications
•Advanced economies need to insure against the possible undercutting of skill/capital intensive production from China by
supporting innovation in more advanced technologies.
•Advanced economies will also need to insure against downward pressures on labour standards by supporting institutions
that encourage equality. This will also support innovation and investment.
•Developing economies must identify niche markets that complement growing areas of Chinese production, rather than
attempting head-on competition.
•Developing economies will also need to resist downward pressures on labour standards by supporting institutions that
encourage equality.
•Failing national-level institutional policy safeguarding labour standards, international-level policy instituting equality will be
necessary.
China and its role in the global market
In The World is Flat, Thomas Friedman (2005) claims horizon-
tal globalisation, information technology and the lowering
of national barriers has shifted the global division of labour
that lay between the developed and developing countries
of the world. Increased competition between traditional and
emerging economies at the top end of the world’s produc-
tion line incentivises innovation, while still-developing econ-
omies benefit from the low-end production left behind. In
order for the traditional developed economies to maintain
their predominance as they face imitation from abroad, they
are presented with a challenge to overcome: emerging mar-
kets do what the west once did, real wages improve due to
cheaper imports and the west capitalises on its advantage,
innovating to ever-higher levels of production. Globalisation
is a win–win situation.
While Friedman’s vision of global capital depicts a race to
the top in terms of income and labour standards, Richard
Freeman (2010) illustrates that emerging markets offer the
global economy far more in terms of labour than they do in
capital and as their labour force enters the global economy,
the ratio between capital and labour pivots in favour of the
former. Without the ability to accommodate this influx of
labour, the global economy is defined less by the competi-
tion to produce and innovate than by the competition to
find work and a decent standard of living. This is the race to
the bottom. As emerging economies present to global capi-
tal cheaper labour forces, offshoring from traditional sources
of production occurs –the relocation of capital in its pursuit
to maximise gains. In the race to the bottom, national econ-
omies compete not in terms of higher levels of production
but in attracting fleet-footed capital by suppressing labour
standards. In this competition the trend is repeated as an
equilibrium (that is lower than expected in terms of labour
standards) is reached globally until the surplus workforce is
absorbed.
This article seeks to examine the validity of Freeman’s
concerns by exploring China’s role in the global market
place. As China’s economy develops away from low-level
production and cheap labour, and as incomes increase,
higher levels of production will become both attainable and
Global Policy (2016) 7:1 doi: 10.1111/1758-5899.12252 ©2015 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 7 . Issue 1 . February 2016 37
Research Article
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