China has been the power engine of global economic growth since the Chinese Communist Party embraced free market economics some 30 years ago. What leveraged China's momentous success has been its people, or - to be more precise - the enormous number of cheap labour that migrated from the rural areas to the cities, some of which had to be built from scratch in order to accommodate millions of new residents. Low wages, foreign investment and open markets made China the manufacturing powerhouse of the world. But things have changed since those halcyon days of easy growth.
Labour supply in China has become increasingly scarcer, a fact reflected in the almost exponential rise of wages since the beginning of the 2000s. In 1996 the average monthly salary of a Chinese factory worker was around $77. Today is six times higher and close to $460. China has gone past the so-called "Lewis inflection point", named after Nobel-prize winning economist Arthur Lewis who in the 1950s argued that surplus agricultural labour could develop a country's industrial sector without wage inflation. People power has become expensive in China, setting off a spiralling trend for the future. A disastrous combination of the communist one-child policy of the late 1970s with widely opted sex-selective abortions has meant that China is facing a daunting, two-pronged demographic cliff. First, it is ageing rapidly: Chinese will become older than Americans by 2020, and Europeans by 2030. Secondly, the young few will be grossly mismatched to produce the next generation: by 2025 there will be 96.5 million men in their 20s corresponding to 86.3 million women of a similar age. Simply put, humans cannot be counted for continuing the drive of Chinese economic growth.
But China has a political advantage for addressing this problem that we in the West seem to lack. Our democracies operate in 4 to 5 year political cycles, which make long-term planning a huge political challenge. China is a dictatorship; and with the Communist Party not in a mood to give away its power the Chinese leadership have already embraced a policy about which we in the West are still debating about: they have decided to automate their workforce.
According to the International Federation of Robotics China has become the biggest buyer of robots since 2013, vastly surpassing Japan and the US. Although the ratio of robots per humans is still low relatively to other industrialized nations, China has embarked on an ambitious goal to automating its manufacturing sector as quickly as possible. By 2018 China will account for a third of all robots installed worldwide.
The other big advantage that China has over the West is that it is not hanged up on fears that robots will wipe out the human race. Like the Japanese and the rest of its Asian neighbours, Chinese culture is very friendly to mechanical beings. One of the oldest Taoist manuscripts, Liezi, written in 400 BC describes human-like automata. While we debate the future of work in the age of cognitive computing and big data China has began to replace humans with robots, having internalised the fact that what we think today as work will become something completely different in the future. Perhaps something for which a totalitarian regime, with the ability to manage long-term change, quash opposite views, mandate universal income, and execute social engineering, is better suited to handle. The end of history seems to be a long way off, with many surprises in store.
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