China has emerged as one of the major actors in the global economy frontiers. The remarkable progress and growth in the Chinese economy in the past decades is attributed to the central role of capitalism. Communism failed to strengthen the economic power of the nation in the global realms but now the dream is a reality, thanks to the capitalist system (Koppel, 2012). The contemporary Chinese society is dependent on the capitalism for survival. The capitalist industry based on cheap and reliable labor has made transitional companies move into China at an unprecedented rate. Although, it can be viewed as a form of exploitation, the growth and survival of Chinese people and the economy is founded on the capitalist system.
As a result of high population and ascending unemployment rate, China has readily available cheap labor. Wages for Chinese factory workers are exceedingly low while on the other hand, the productivity is high. The competitive advantage that transnational companies accrue is the major underlining factor in the rush to work offshoring. The primary motivation for companies to shift their production and manufacturing in China is to leverage on the cheap labor in China. In order to satisfy the western consumer culture, workers in China are willing for lower wages in the export-oriented factories. Since in capitalism, the market wages of employees are determined by the prevailing market value of labor, it is clear that workers have no bargaining rights. Businesses are leveraging on the cheap Chinese factory labor since numerous are unemployed, and the labor pool is abundant. Despite the geographical variance between the United States and China, the cheap labor pool still allows the multinational corporations to make impressive profits on goods made in China. Commodities produced in Chinese factories are cheaper in oversea markets and beyond the reach of average Chinese citizens.
Major electronics, apparel, and pharmaceuticals companies have moved into China due to the lower cost of production that is fuelled by the power of capitalism. The bottom line for companies with manufacturing bases in China is ever expanding due to the economic efficiencies that are hinged on cheap labor. These companies enjoy abundant supplies of cheap labor and low cost advantages. In addition to the cheap labor pool, the Chinese government is also cooperative with investors. Wage inequality between factory workers in the United States and China are also pronounced. For example, typical quality control personnel in the United States earn an average of $ 20 per hour, while the same personnel in China earn the same amount in one week (Koppel, 2012).
The capitalist system in China has and continues to give rise to income inequalities. Income inequality is a reality in the contemporary Chinese society. The rising gap between the rich and the poor is a stark reality. Since most employees working in China are paid low wages, they are unable to purchase commodities from other western countries such as the United States. An examination of the Chinese consumption pattern reveals a huge gap in the social class.
The modernization of the China and its economy lies in the exploitation of capitalism, particularly in relation to labor dynamics. There is no doubt that the competitive advantages that are based on China’s cheap labor are the prime motivator for multinational enterprises to set up their manufacturing bases in China. Although the Chinese economy is based on capitalism, there is a compelling need for multinational companies relying on the cheap Chinese factory labor to implement global labor laws and rights. The features look bright for China has it strengthens its position in the global marketplace. This can be evidenced by the collaboration between Chinese firms and other firms in oversea markets.
Reference
Koppel, T. (2012,August 3). The People's Republic of Capitalism Part 1 .[Video File] Retrieved fromhttps://www.youtube.com/watch?v=Mtf2H4YrYVw&list=PLnzLbVlvbZLpv_YJf_5YKl8QJbnNTwuFm
