Another Advantage of the Chinese Democracy

Traditional Chinese industries are facing a labor shortage, increasing wages, as well as harsh competition. Many Chinese workers are at the same time without jobs. The Chinese solution is replacing workers with robots.

The Chinese wages are increasing and thus the industries production costs. Low-wage countries like Bangladesh and Vietnam are taking a larger and larger share of Chinese markets. With its market shares in decline, the Chinese government are prepared to take drastic measures to ensure that the fast economic growth of the Chinese economy continues into the future. In the wake of the slow down, Chinese factories are closing as demand has been dwindling in both foreign and domestic markets and production costs are too high.

Donguang, once responsible for the manufacturing of one fourth of the world’s sneakers, is now in decline with many workers losing their jobs. Factories are forced to shut down as textile and shoe production is moved away from China, sometimes even without paying for the workers´ salaries. In some factories, in other industries, factory owners have found a solution to the halt the decline. A solution subsidized by the Chinese government.

China is replacing humans with robots, its labor with its capital. The New York Times reports that the Chinese government has launched a project for the replacement of human workers with robots. The project is creatively named “replacing humans with robots”. China is offering grants and land subsidies for companies that “go robotic”. In addition, China is currently the home of one of the worlds largest robot manufacturers, Kuka.

That the government should be investing in eliminating jobs in a recession (or economic downturn) may seem foreign, but actually makes a lot of sense for China. The country has acquired an increasing number of more educated workers with its rapidly expanding education system. In December 2015, The New York Times reported in an article that “a quarter of every Chinese youth now attend at least some university” explaining that at least 25.5 million undergraduates were enrolled by December 2014. The one-child policy has left China with an aging population. In light of these new qualified workers it seems, to this writer, that it is only natural that China is shifting its focus from simpler industries like textile to the high-tech industry and the green industry.

Maybe the Chinese way should be considered by some countries in the West as well. Europe, like China, faces an aging population with declining birthrates. If one had one of the world’s most educated workforces, in addition to a surplus of engineers and energy, one could compete with labor intensive production in the third world through robotics. Would a democratic Western government ever be able to initiate such a program, actively eliminating jobs in order to secure a better future? Could it be that the Chinese dictatorship gives an institutional absolute advantage for manufacturing in China?