Us media reported on August 18 that for now, either from a wage point of view, China will catch up with some European countries; or wages in the latest member states of the European Union are limited by the global competition for labor, which China easily won. In fact, both situations exist.
The median monthly salary of Chinese people in Shanghai ($1135), Beijing ($983) and Shenzhen ($938) has exceeded that of Croatia, the newest member of the European Union, according to the website of Forbes Weekly on Aug. 16. The median net monthly salary in Croatia is $887. Croatia joined the European Union in 2013.
The median wage in Shanghai also exceeds that of the two newest in the Baltic region.EuroMembers of the region-Lithuania (US $956) and Latvia (US $1005). The median monthly income of Estonia, another Baltic state, is $1256, according to government data in 2016.
Over the past decade, Europe has been trying to integrate low-cost skilled workers from eastern Europe into the EU. China fully integrated into the global labor force after its accession to the World Trade Organization in 2001. The entry of Chinese and Eastern European workers into the world workforce has led to stagnant wages for unskilled and assembly line workers around the world.
Neil McKinnon, an economist at the Russian Foreign Trade Bank Capital Company, said that in economics, this is called "the flattening of the Phillips curve."
"the impact of globalization and China's accession to the World Trade Organization in 2001 have greatly increased the global labor supply," he said. "for global consumers, the oversupply of Chinese labor and the influx of low-cost Chinese products into the world economy is a boon. But it also means that some products and jobs in Eastern Europe have to compete with lower-cost China. In addition to the supply chain and market, the biggest cost of an enterprise is labor. Chinese workers finally earn their wages. There is a maxim in the world: China can do anything you can do more cheaply. In this case, the fate of Eastern Europe, where wages are similar to those of China, is to be expected.
China sets prices for manufacturing workers. In the future, China will also set prices for e-commerce-related logistics. If they want to increase their total wages, some Europeans should hope that Chinese wages will continue to rise.
China's share of world trade has risen from less than 2% in 1990 to about 15% today, according to the bank for international settlements. Since 1990, the Chinese market has joined the global economy, mainly led by its workforce, because China's capital-to-labor ratio is lower than global standards. China is just beginning to automate.
The integration of China and Eastern Europe into the world economy has brought wages in the new EU member states on a par with those in China. In the wage race, China is catching up, while Eastern Europe is not moving at the same pace.
From the 1990s to the present, Eastern European countries have shrugged off Russian control and moved westward. Until then, these countries were more or less isolated. Labour resources are abundant and well-educated, but capital and management skills are limited. This has resulted in a productive combination: Western Europe provides capital and management skills, while Eastern Europe provides cheap labour.
The figures related to the integration of China and Eastern Europe into the world economy are startling. The working population of China and Eastern Europe between the ages of 20 and 64 reached 820 million in 1990 and 1.2 billion in 2015. Before the collapse of the Soviet Union in 1990, the working population of European industrialized countries was 685 million; in 2014, the figure was 763 million, according to the Bank for International Settlements. The rapid growth of the labour force limits the wage growth of less skilled workers.