> This hasn't been really put to the test yet, has it?
Yes. Their textile industry has been gradually leaving for much of the past decade, as cheaper production exists in several other countries at this point. Textile dominance by China peaked around 10-15 years ago. They will lose labor cost sensitive industries to their cheaper competitors as their economy continues to climb, as labor costs continue to climb. It took many decades for the US textile industry - the world's largest for a while in the 20th century - to be worn down by this same process. During the first 2/3 of the 20th century the US was often a leader in inventing new textile technology and manufacturing processes. Toward the waning days many US textile makers tried to modernize and or consolidate their domestic operations as a competitive advantage, it didn't stop the process. Most sent their manufacturing overseas ultimately. China is currently attempting to modernize, reduce labor in the manufacturing process, and that also won't stop the industry from leaving. Textiles are one of the first major industries that tend to leave due to being particularly labor cost sensitivity.
China is still the world's largest textile exporter, and may retain that crown for a long time yet given their size. A large chunk of their market share is going to be gradually dispersed across two dozen other nations.
Vietnam for example became the largest textile exporter to the US in 2019 (pre pandemic), overtaking China. Vietnam's GDP per capita is $3,600 versus $11,800 for China. Vietnam is in the position that China was 15 years ago in that regard. China will struggle to compete with labor that costs 1/2 or 1/3 what theirs does.
Isn't that just the plan of every developing country? You start with textiles, then move up the value chain until you're a developed country and can pay for socialism or aircraft carriers or whatever you want.
It's not the plan, it is probably an inevitability. If you could automate your textiles, with 1/100th the labor, while retaining it all, you'd still want to keep it even at a reduced labor benefit, rather than see it go to China or elsewhere. China would rather keep all of their textile industry and hyper automate it, than see it leave to countries like Vietnam. Keeping industry like that internally has vast benefits, in terms of profit/savings, capital, technology and economic eco-system, leverage, influence, and so on.
If the US could automate low-value manufacturing through robotics and get a significant cost advantage over China and pull back much of the low-value manufacturing that it lost, while getting very little labor benefit in the process, it would still be ideal for numerous reason to achieve that outcome (tax base, deprive China of that value, onshore capital and technology investment, some construction & maintenance value, wider economic ecosystem, and so on).
China's big problem with this process is of course that they have 1.4 billion people. High-value replacement jobs for so many of their low-value manufacturing workers is something beyond difficult (you don't need 100 million software developers to build China's tech infrastructure; you don't need 10x the workers to build as many planes as Boeing or Airbus do). High-value manufacturing for example doesn't absorb labor like low-value manufacturing does. Their social welfare costs over the next 30-40 years will be extraordinary as their demographics rapidly shift toward being an older society. They're already into a workforce decline demographically, those aging & retiring workers begin to shift more to the liability column in terms of cost. They need their workforce employed and pumping tax dollars into the system. Automation is not China's friend, even if they're the ones doing it to themselves (if they had a critical national labor shortage, that would be a different matter).
If China were to take over all of Germany's auto manufacturing (obviously we're talking a huge share of the global auto market), how many jobs is that worth to China and how does that scope to their 1.4 billion context (Germany has a mere 83m people)? What does something like that do for their context. That's the essential China labor and automation problem going forward. They could conquer a lot of high value manufacturing and be worse off overall than they are now, unless they can somehow keep all of their people employed, keep most of their low-value manufacturing employment simultaneously. And if China did use 4x the labor to build the equivalent of Germany's auto output (say they absorb their labor oversupply that way), that then caps the ability for that labor to rise economically, the margins won't be there to support far higher incomes, which has serious social consequences in terms of stability in China long-term. China would probably need to own all high-value manufacturing globally to both keep their people employed and keep incomes rising like they have been.
I think this question of unemployment and underemployment is one that's simply going to get worse everywhere, and I don't see a non-political solution. I just don't see a realistic way to employ everybody, or even a majority, in a high automation society.
So my feeling is, the countries that will be best placed to tackle this are the ones that are able to push forward a political solution. I'm not entirely sure of how socialist china is, but there are certainly some socialists in the CCP who would be perfectly happy for everybody to be unemployed or underemployed, and to pay for them from the profits of highly automated industry.
I think it's probably a question of ideological flexibility. Because China is both officially marxist, practically capitalist, traditionally confucian, and pragmatically developmentalist, they have a lot of options open when it comes to political solutions that western countries don't. So they could, for instance, just pay everybody UBI, then point out that China is a socialist country if elites object. That would be a harder argument in officially capitalist countries.
I don't imagine they'll go that way, but I guess the basic point for me is that productivity, employment, and welfare are largely the result of political decisions. You can run the economy like they did in the DDR, where everybody had a job even if it was totally meaningless. You can run the economy like in Japan, where if you have a job, you'll probably never lose it. These things have different tradeoffs. The biggest challenges are usually how hardened the political discourse is around work itself.
Yes. Their textile industry has been gradually leaving for much of the past decade, as cheaper production exists in several other countries at this point. Textile dominance by China peaked around 10-15 years ago. They will lose labor cost sensitive industries to their cheaper competitors as their economy continues to climb, as labor costs continue to climb. It took many decades for the US textile industry - the world's largest for a while in the 20th century - to be worn down by this same process. During the first 2/3 of the 20th century the US was often a leader in inventing new textile technology and manufacturing processes. Toward the waning days many US textile makers tried to modernize and or consolidate their domestic operations as a competitive advantage, it didn't stop the process. Most sent their manufacturing overseas ultimately. China is currently attempting to modernize, reduce labor in the manufacturing process, and that also won't stop the industry from leaving. Textiles are one of the first major industries that tend to leave due to being particularly labor cost sensitivity.
China is still the world's largest textile exporter, and may retain that crown for a long time yet given their size. A large chunk of their market share is going to be gradually dispersed across two dozen other nations.
Vietnam for example became the largest textile exporter to the US in 2019 (pre pandemic), overtaking China. Vietnam's GDP per capita is $3,600 versus $11,800 for China. Vietnam is in the position that China was 15 years ago in that regard. China will struggle to compete with labor that costs 1/2 or 1/3 what theirs does.