December 20, 2006
By Ethel HazelhurstJohannesburg - China's success on global export markets is already a threat to higher-cost producers around the world. But the rapidly emerging industrial giant, which has averaged growth of 10 percent a year for the past 20 years, has a reservoir of untapped human resources with the capacity to produce much more.
US Federal Reserve board governor Ben Bernanke highlighted this fact in a speech inBeijing last week.
He spoke ofChina's excellent record of productivity. Output per worker, which grew vigorously at an estimated 6.5 percent a year between 1978 and 1989, accelerated thereafter.
Between 1990 and 2005 productivity grew "at an even more impressive rate of 9 percent a year", said Bernanke.
The process has seen an ongoing movement of workers from relatively low-productivity, low-wage jobs in agriculture to higher-productivity, higher-wage jobs in manufacturing and services.
Bernanke identified small and medium-sized enterprises as an emerging engine of job creation, which would benefit from policies that further reduce barriers to labour mobility, encourage entrepreneurship, support small business development and help train workers to be productive in newoccupations.
Bernanke was making the case for further freeingChina's economy from the constraints of central planning that have been falling away since its open-door policy reforms began in 1978.
His lesson is one that can be usefully applied inSouth Africa.
ThoughSouth Africa's financial and capital markets are more open than China's, the country has some way to go before it can achieve China's productivity growth.
Instead of allowing resources to be allocated to its most productive sectors,South Africa's response to competition from cheap Chinese imports has been to impose restrictions on a wide range of clothing and textile imports as from next month.
The department of trade and industry and the Southern African Clothing and Textile Workers'Union claim that 67 000 workers have lost their jobs since 2002/03, and see competition from imports as a critical factor.
They argue that import quotas will create 55 000 new jobs.
Mike Morris and Lawrence Edwards, a professor and senior lecturer respectively at theSchool of Economics at the University of Cape Town, say that the causal connection between Chinese imports and job losses is not clear and that the expectations about the extent of job creation are unrealistic.
Standard Bank chief economist Goolam Ballim said: "Liberalisation, free markets, increased competition, more consumer choice, and little appetite for corruption are healthy ingredients which, combined, create a near certain recipe for faster, sustainable growth."
Both countries, it seems, have a way to go before they can match the achievements of the Nordic economies, which Ballim said were "considered by many to be a model of economic and social success, with high levels of national welfare".