00:00China, of course, has been that export giant and may be an export giant, but despite that massive
00:05trade surplus, its factory workers are increasingly being left behind, and the trend towards AI
00:10robotics is set to make things worse. Let's bring in Colin Murphy. He's our China economy
00:14and government reporter. He's with us now with a very fantastic piece kind of laying out
00:19really what could happen to the labor market if we continue on this sort of high manufacturing
00:25AI sort of wave. China has been posting record exports, as you say, and yet you're
00:29reporting shows that export growth is translating into jobs, not really in the way that it used to.
00:34Why is that? Right. So as you said, there's this big sort of contradiction. On the one hand, we have
00:43last year, $1.2 trillion trade surplus on China's behalf. And, you know, you would imagine that
00:52that would trickle down to the workers, that they would have benefits, that their standard of living
00:56would be increasing. But we discovered when we went on our reporting trip to Guangdong province
01:03a couple of weeks back, that that's not actually the case. And there are many, many reasons,
01:08including automation, which we can get to in a bit. But one of the things that we identified in our
01:14research was that obviously, as China is now sort of moving up the value chain when it comes to exports,
01:22more value add. A lot of the exports are coming in areas like chips or cars. And these are industries
01:29that do not create basically as much jobs as might have been the case in the past when we're looking
01:35at more traditional industries where labor was really a major force in driving those exports.
01:43So that's basically one of the core contradictions that we unveil during the reporting trip to the south.
01:53And then, I guess, risking asking the obvious, why specifically the Guangdong province?
02:02Yeah, well, you know, obviously, it is the sort of the traditional sort of powerhouse of China's
02:09factory economy. As an exporting entity, if it was like its own country, for example,
02:15it would be, I think, top six globally. So it definitely is right there front and center when
02:22it comes to exports. But at the same time, it's also been underperforming the national growth rate,
02:29GDP growth rate for the past four years. So this obviously gives us a lot of material to work
02:35with and sort of explore how the Guangdong can be an example or a sort of a petri dish for
02:42the country
02:42at large, looking at this gap between the export surge and then the reality on the ground amongst
02:51workers. Another some aspects about Guangdong that I think are worth mentioning, of course,
02:56is that the the reliance of the property sector for the economy is particularly strong. And of course,
03:02property has been, you know, declining as a sector in China for the recent years. So there's that
03:09impact as well. You know, when it comes to property, it's not just the confidence amongst consumers,
03:16but in the case of Guangdong specifically, it also is a big producer of construction materials. So
03:21we went, for example, to a ceramics market, and we were looking around there and it was basically
03:27desolate. There were very, very few customers. You know, all of the shops or many of the shops were
03:34shuttered. Nearby businesses that would have served customers like hotels and restaurants were also
03:41closed or barely empty. So I think that's another aspect of Guangdong that's quite particularly
03:47interesting, the connection to the property sector, but also other traditional industries such as apparel.
03:52So obviously, it's the home of many factories and workshops that provide material and goods to
04:02consumer brands like Shein and so on and so forth. So I think, again, these are some of the reasons
04:06why
04:07Guangdong represented a good choice. And some of the people that you spoke to there, I mean,
04:13they said they're just there to earn enough to eat and pay rent. I mean, one of them said they
04:18make
04:18less than 100 RMB. That's about 14 US dollars a day in the past few years. So that certainly does
04:25show
04:25what they've been going through. Colm, tell a little more about how does involution,
04:30automation, even the gig economy, how do you think that sort of plays into all of this too?
04:36So right, as I mentioned at the top, you know, the changing nature of the exports is only really one
04:42element of this. And there are many, many different elements. So involution, as we know, is this sort of
04:49cutthroat competition that really squeezes profit margins for many domestic companies here in China.
04:55Obviously, that trickles down also to the workers. It means that their companies are are paring back
05:00on salaries or being more frugal in terms of hiring. Automation, of course, China has been front and
05:07foremost embracing this. I think there are more industrial robots in China than in any other
05:12countries in the world, any other country in the world. And that also has an impact on employment
05:18insofar as that now either fewer workers are required or none at all. So these are two other
05:24factors at play. And then we're seeing the growth of the gig economy. I think it's something like 40%
05:31of urban on urban employment is now accounted by the gig economy. This has two aspects that are
05:38worth noting. One, of course, is that such jobs typically don't come with benefits. And also,
05:46those those particular sectors are quite prone to further sort of demise by automation going forward.
05:52So think about ride hailing cabs, for example. A lot of those drivers who would have come from other
05:58industries will could one day sooner or later lose their jobs to say driverless taxis.
06:07A column just quickly. We know this is a policy priority automation and robotics. What could be
06:13or what should be or what is the policy offset to sort of blunt the blow to the labor market
06:18here?
06:21Well, I think we're now in the MPC session, obviously. So I mean, lawmakers
06:25will be looking at how this sort of drive for new technologies and how to push the economy based
06:32on new technologies, while being all very good and well on one hand, does have the fact that,
06:39you know, are we replacing jobs quickly enough? And I think that has been has to be one area where
06:45the policymakers need to look more closely.
06:47One of the things that struck me talking to the people on the street and when during our reporting
06:52was that many of them felt like completely hopeless or helpless. They didn't know how to
06:59get new skills or reposition themselves in the marketplace. So I think the government can do more
07:04more to help people figure out their future path.
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