Migration and the changing (economic) landscape

Published on Author wenxiang

Travel Congestion in ChinaAs China’s (rural) population increasingly embraces the migrant lifestyle, the nation’s transportation infrastructure will come under immense strain during the biannual golden weeks, when the migrant population returns home to celebrate the holidays. The government has consistently poured much of its stimulus into infrastructural spending, often at the risk of contributing to the ongoing housing bubble. However, this spending has yet to keep up (perhaps by design) by the demand experienced during the Golden Week periods, with train carriages and buses packed to (and often, beyond) the brim with travelling workers. The trend of migration is not likely to cease in the short run, however, as China increasingly experiences a wage differential between coastal and inner regions. Although much of the manufacturing is projected to shift inward, chasing the wage differential, the rapid increase in cost-of-living within the urban environments is likely to see the migrants follow the jobs inland, reflecting the weakness within China’s current model: Although China seeks to attain the status of a developed nation, it’s population and growth model are heavily reliant upon manufacturing, an industry that does not contribute overmuch to employment in a developed economy. Given the sheer size of the Chinese population, the transition to a service economy will be fraught with difficulties even as its coping mechanism – the one child policy – distorts its demographics beyond that of the average developed nation.

3 Responses to Migration and the changing (economic) landscape

  1. You make some interesting points about China’s overburdened infrastructure, reliance on manufacturing, and changing demographics, but I’m not entirely sure that I agree with/understand some of the conclusions.
    1) How is infrastructure spending tied to housing prices? I think the main driver of rising housing prices is the lack of investment opportunities for Chinese people.
    2) Not all developed countries have a dearth of manufacturing employment (Germany ~20%, Japan ~15% of their respective work forces are engaged in manufacturing), so is a high level of manufacturing really a roadblock to development?

    Nevertheless, as you say, China’s distorted demographic trends certainly will affect their growth patterns. It will be very interesting to see how their economy changes as the population ages and as more workers leave the labor force.

  2. Does China today rely on manufacturing? I’m not sure that’s what you find in GDP data! Rather urbanization contributes a lot to demands — infrastructure, housing, furniture and appliances for the new residents.

    We’ll spend a whole segment of the course (and you’ll write a paper) on migration.

  3. It would be interesting to look at china’s housing market and durable good markets given the amount of migrating and relocation that occurs within the country. Housing markets are probably extremely liquid compared to the US…do the majority of people in cities rent or own?