Unrest May Signal New Phase in China Economy

The New York Times looks at the economic implications of the strike at the Honda factory in China:

Rapidly rising industrial are beginning to allow China’s workers to share in their country’s rising prosperity. The question is whether these gains can be maintained and even increased without disrupting supply lines to companies around the world, and without discouraging much future investment by Chinese and global companies alike.

The biggest eye-opener for multinationals in China recently has been a nine-day-old strike at a sprawling transmission factory here in Foshan, about 100 miles northwest of Hong Kong.

The strike, which has forced Honda to suspend production at all four of its joint venture assembly plants in China, has shown that Chinese authorities are willing to tolerate work stoppages at least temporarily, even at high-tech operations on which many other factories depend.

Chinese policy makers are trying to let wages rise to create the foundations of an economy driven by domestic demand, without derailing the export machine that has produced the world’s strongest economic growth over the last three decades.

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