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Labor-intensive Industries Expected to Play Important Role
Rich labor resources and mounting employment pressures will make it a must for China to continue to develop labor-intensive manufacturing industries after China joins the World Trade Organization (WTO).

Although the country has vowed to develop high-tech industries and computerize its national economy during the 10th Five-Year Plan (2001-05) period, experts say it is impossible for the world's most populous nation to give up labor-intensive industries.

"We cannot realize expected economic growth and ease the employment pressure without that industry," said Yang Qixian, deputy director of the China Society for Research on Economic System Reform.

Now, manufacturing industries contribute about 35 per cent to China's gross domestic product. The country has also become one of the world's leading manufacturing bases and leading suppliers of products such as household electric appliances, garments, toys, shoes and light industrial products.

Booming manufacturing industries also fueled economic take-offs in South China's Guangdong Province and in eastern coastal areas in the 1980s and 1990s.

Many experts believe that developing labor-intensive sectors will be the best way for China to get out of its current dilemma trying to create enough jobs to satisfy demand in a huge labor market.

Every year, about 16 million people nationwide will enter the job market. About 6 million of them will do so in urban areas, according to a report by the Chinese Academy of Social Sciences (CASS).

People laid off from reformed State enterprises - many of them low-skilled and middle-aged - will be forced to find jobs in the manufacturing and service sectors since those sectors require relatively low-grade skills.

"China has the unique advantage in developing labor-intensive industries, which is incomparable for any other countries," said Chen Jiagui, deputy director of CASS, at a recent seminar on labor-intensive industries in China.

"Many sectors will likely be affected by China's WTO membership, but the only sector we do not have to worry about is the labor-intensive industries," Chen said.

But China cannot rely too heavily on such manufacturing sectors over the long term and still expect to catch up with developed nations in the high-tech sector.

"It can be a transitional strategy to make the country a manufacturing base for the whole world, but that cannot be our final goal," the CASS report said.

The country, as a whole, must adopt a strategy to develop high-tech sectors, but different areas with different development levels can make some of their own choices.

For example, Beijing, Shanghai and Shenzhen have all decided to develop high-tech industries as their economic pillar while inland regions, especially western areas of China, can still choose to develop labor-intensive or resources-intensive sectors.

But labor-intensive sectors still face challenges in upgrading technologies, management and quality of employees.

"Labor-intensive sectors can not be the synonym for low quality, low grade and poor management," said Xie Fuzhan, deputy director of the State Council's Development and Research Centre.

Chang Xiuze, a researcher with the Economic Research Institute under the State Development Planning Commission, said it is likely that the labor-intensive and high-tech sectors will co-exist in some industries.

"In the next round of world economic restructuring, it is very likely that developed countries will shift the labor-intensive part of their high-tech industries to developing countries, especially on the Chinese mainland," he said.

Even capital-intensive sectors, such as steel making, petrochemical, auto making and machine building, will have the opportunity to be shifted to the Chinese mainland.

He said some coastal areas, especially the Yangtze River Delta, have vowed to seize that opportunity and are already studying the new trend.

(China Daily09/24/2001)

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