Rich and poor countries

China, Hong Kong and Sweden


China is still a very poor country. Productivity is very low so wages are, therefore, also very low. Productivity and wages goes hand in hand. For an example, go to; http://www.rieti.go.jp/en/china/02083001.html. Once, a long time ago, I was in Hong Kong*, and wages there were among the highest in Asia. Real wages increased about 10% per year, for the reason that productivity per hour work increased that much. Unions were very weak and had no influence, but wages increased anyway, because of competition between employers. As productivity increases, cost per employee gets lower and, therefore, the demand for labour increases and wages goes up. Productivity goes up for the reason that increased savings leads to ever higher capital investments per employee. That is the recipe for high wages and all Western countries have gone through that process.

Wages and living standards in China are higher than ever, but compared to the western countries, extremely low. In poor countries the average worker wants to work more hours than the average workers wants to do in the Western countries. Why? Isn’t that obvious? If your wage barely can support your family, life will be easier if you can work and earn more. We must remember that. Japan, Taiwan, South Korea, Hong Kong and Singapore once were very poor countries and today are better off, China also, will in the future, be richer and the living standard higher. Working hours will then be a lot shorter. There is no “short cut” for a higher standard of living and for a shorter working week. Many companies are “forced” by market forces to invest in countries like China. Consumers have a tendency to buy the cheapest goods and if they are not produced in those countries where they are produced for the lowest costs, they can’t compete. It is no point in accusing businesses for being greedy, they are, but so are we consumers.

Today, Hong Kong is even richer than Sweden. Hong Kong has accomplished in a much shorter time a higher GNP per capita and also a higher life expectancy than Sweden. The Swedish economic growth rate was also higher relatively to other countries when the economy was more free market oriented in the period before 1970. Sweden has also avoided two world wars.


For some information about Hong Kong, go to;
http://www.answers.com/hong+kong?gwp=11&ver=2.0.1.458&method=3

And for some information about Sweden, go to;
http://www.answers.com/sweden?gwp=11&ver=2.0.1.458&method=3

Free enterprise in action, just look at all those symbols of creativity and wealth, I really feel sorry for the people in the People’s Republic of China, go to;
http://my.tdctrade.com/photolib/hk/0100063L.jpg

If China, 50 years ago, had chosen the same path which it is now following, living standards in today’s China would probably be about the same as it is in Hong Kong. The Communist religion was really encouraging long working days and low wages in China.

Some information about rising wages in China, go to;
http://www.businessweek.com/the_thread/economicsunbound/archives/2006/03/rising_wages_in.html


Björn Lundahl
Göteborg Sweden


• Hong Kong is a free port with no tariffs and exchange controls and is probably the most free market oriented region in the world.