The ways in which China gets cheap to do its low-cost manufacturing

Chinese companies are able to take these manufacturing jobs from the U.S. and elsewhere for more reasons than simply having the lower wage costs of a developing country. Here’s how else China does it.

First, it has it’s own internal equivalent to illegal aliens — Chinese peasants who come to its largest cities, but without residency permits. They get paid $1 a day — if they get paid.

That, in turn reflects larger income inequalities. We all know the U.S. is worse than the other developed countries, i.e., Canada, Western Europe, Australia, Japan. But, this supposedly “Communist” country is actually four points worse than the U.S. on the 0-100 Gini income inequality scale.

Second, in China’s north, if you count all the costs of environmental degradation, at least some of which have to be priced “on book” in Western countries, the true economic growth rate is at least 3 percentage points less than Beijing reports.