Yoshida in China: Workers can't afford products they make
8/20/2012 10:34 AM EDT
How China’s massive population of rural migrant workers have helped fuel China’s economy is a well known story. Without their labor, China’s big cities wouldn’t have grown so quickly and Foxconn wouldn’t have been able to manufacture Apple’s iPhones and iPads at low cost.
A report from China's National Population and Family Planning Commission sheds new light on the status of 230 million migrant workers in China and their spending behavior. As wholesale urbanization continues, how these migrant workers will become true middle-class consumers is a key to consumption-driven growth as opposed to China’s traditional investment-driven planned economic growth.
Citing the government study, Reuters reported, “China's domestic migrant labor force could power consumer spending growth in the world's second biggest economy if workers had better access to basic welfare services in the cities where they live and work.”
A complication in this prescription comes from China’s stringent household registration system. Many migrant workers living in big cities lack access to education, healthcare and other services because their entitlement status is tied to their provinces of origin, not to the cities to which they have migrated.
Without access to these social services, migrants have to burn their meager savings, as they pay market rates for otherwise free (or subsidized) public services, according to the report. "Giving the migrant population living in cities permanent status and giving them equal access to fundamental public services would greatly stimulate China's consumption growth," according to the Chinese government’s latest report.
More specifically, the report found that only 23.1 percent of Chinese migrants had pension insurance in the city in which they lived in 2011. Just 13.6 percent were covered by unemployment insurance and 64.3 percent had medical insurance.
How much do they spend a year? Migrant workers, relatively low paid, spent an average of 56 percent of their salary increases in 2011, according to data in the report.Migrant workers living in any given city for one year spent 1,761 yuan ($277) on average, increasing to 2,609 yuan ($410) if they stayed for five years or longer, the report said.
City dwellers covered for basic welfare services typically spend 1.4 times as much as those who are not, the report found. The report forecasts China will have 250 million migrant workers by 2015, 190 million without access to welfare services.
Toshiba's New Magnet Free Of Chinese Rare Earths
Japan is on a mission to become less dependent on China’s rare earths.
Toshiba Corp. last week announced it has developed a powerful motor magnet that does not contain dysprosium, a rare-earth metal that comes mostly from China.
The magnet instead uses samarium, a rare-earth metal abundant in Australia and the United States, according to the Japanese company. Toshiba aims to begin sales of the magnet for use in electric vehicles and industrial equipment by March, 2013.