SYLVIE DOUGLIS, BYLINE: NPR.
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DARIAN WOODS, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Darian Woods. So here's a little bit of shopping magic. Every year, televisions get better, bigger, and they also get cheaper. It's the same thing with all kinds of other electronics. Quality goes up. Prices go down. And that's been happening for so many years so consistently that I've almost taken it for granted. And it's all part of a process that rests on a foundation of factories that depend on cheap Chinese labor. Emily Feng, NPR's Beijing correspondent, you know this very well.
EMILY FENG, BYLINE: Sort of because that cheap labor could be changing. I've been talking to a lot of people in China about factory work. These people are factory owners and businesspeople, and they're all talking about how hard it is, actually, to find factory workers. One of the people I've been chatting with is Yen Xiyun (ph). She is a recruiter for electronics factories in southern China. Every year, a bunch of factories, WeChat her, they text her how many workers they need - 1,000, 2- or 3,000. And she does her best to find them.
YEN XIYUN: (Through interpreter) Oh, gosh, they really need workers. They're really lacking.
FENG: This trouble that Xiyun is having finding factory workers right now during a pandemic can be traced to a slow creeping trend in China that has become painfully evident in the last year.
WOODS: The pandemic does have this nasty habit of exposing these underlying problems.
FENG: Really serious problems in this case.
WOODS: So today on the show, workers wanted please - plentiful Chinese labor gave the world cheap goods and built China's economy up. And that era could soon be coming to an end. Xiyun's problem could soon spread to the global economy.
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FENG: In China, about a third of workers live in the countryside and travel to bigger cities to work. COVID restrictions got in the way of that last year.
YEN: (Through interpreter) A lot of the roads were closed due to pandemic restrictions, and you have to get special letters and health certificates to travel.
FENG: That's Yen Xiyun, the labor recruiter, back in April 2020, which is when I first met her. At that time, instead of hundreds of people using her to find work, it had trickled into nearly nothing. And even now, a year and a half later, just the threat of COVID restrictions means it's harder for her to find workers able to travel really long distances and willing to be far from their families to go to factories.
WOODS: That sounds really hard for her.
FENG: Yeah, she has to put in a lot more work, and I think she has to cast a wider net.
WOODS: And so the pandemic has really just brought forward what was a looming long-term trend, right? Like, there's now a much lower number of workers available than in the past, regardless of the pandemic.
FENG: Definitely, and we're feeling it now.
WOODS: So we're going to explain this with a bit of Chinese economic history.
FENG: Right. To backtrack, China was an extremely poor country in the 1970s, with a lot of people living in the countryside, mostly in poverty. But starting around 1980, these poor rural workers could finally leave - travel into the cities. And there they could work in grueling factories for up to 18 hours a day, six or seven days a week.
WOODS: I mean, that doesn't sound like a huge opportunity. But...
FENG: It was a mixed bag, right? They could earn more money. But, of, course, they had to work really hard.
WOODS: Right, right.
FENG: Luckily for us, this was the start of China emerging as a manufacturing superstar.
WOODS: And to learn more about China's economic history, we called up finance professor Michael Pettis.
FENG: Aside from knowing the Chinese economy inside and out, he's also deep into the country's music scene. He used to run a Beijing punk rock venue.
MICHAEL PETTIS: Somebody asked one of the musicians why my club became the center of the music scene. And he said because Michael never charges musicians for drinks, so (laughter) I think people like that.
WOODS: I mean, it's a tried-and-true formula.
WOODS: So Michael knows a lot about the pulse of younger workers, or at least the ones going to punk gigs. And to learn more about these people, we have to start with their parents.
PETTIS: China - by the late '70s and early '80s, it was facing what you call a demographic sweet spot. There had been a baby boom after 1949, and a lot of the babies became adults sort of in the 1980s. And as a result, you had this really wonderful dynamic going in which you had a huge number of kids becoming of working age, but you had very few old people retiring.
WOODS: This demographic sweet spot, this baby boom that started in the early 1960s - that was a huge engine of China's growth over the next couple of decades. It also came alongside investments in roads, bridges, machinery. And that demographic sweet spot is captured in a single number - an indicator called the dependency ratio.
FENG: The dependency ratio is a way to figure out who's been able to work versus who's not able to work. The ratio takes the number of all the old people and children and compares this to the number of working-age people. So across the world, the average dependency ratio is roughly 50 dependents for every 100 workers in the population. It's often higher in poor countries with a lot of children compared to adults because they typically have more kids and fewer workers.
WOODS: And in China's case, in 1980, the dependency ratio was 70 - not many workers but a lot of children to look after. And that number would soon fall drastically.
PETTIS: Because of the one-child policy, which prevented Chinese from having more kids.
WOODS: China's one-child policy was a strict and extreme way the government tried to limit population growth. The government forced hundreds of millions of women into long-term contraception and even sterilization. If you had a second child when you weren't meant to, there were massive fines equivalent to years of income.
FENG: Yeah, really awful stuff - and this policy also radically changed the country's demographics fast. For China, by 2010, the dependency ratio had plummeted to just over 35, so that means just over 35 elderly people and children for every 100 people of working age in China, which, if you're wondering, is extremely low by international standards; lower than many rich countries in Europe and North America.
WOODS: And this all meant cheap goods. But after decades of this demographic formula working, there was a turning point that explains what's happening today.
PETTIS: The working population peaked out probably five or six years ago, and it has been shrinking ever since.
FENG: Around 2015 was the turning point for the Chinese economy and every country, including the U.S., that bought stuff from them. China is now rapidly aging. That demographic sweet spot we were talking about earlier that led to all this cheap labor and cheap stuff for us - it's farther and farther behind us each year.
WOODS: And beyond an aging population, there's another reason that factories are finding it harder to hire new workers - stigma around blue-collar work, especially among young people. So imagine you're one of those factory workers in the 1990s. You've moved from your hometown to sweat and toil for peanuts. And you have one child, and you've put everything you have into educating that child. Do you want them to work in a factory as well?
FENG: Michael Pettis says that Chinese people in their 20s with college degrees face two options - blue-collar work in a factory or, say, a delivery driver or white-collar work with intense competition and low pay. And some young people are reasonably questioning that choice.
PETTIS: It's basically the old American slackers, where a whirring large number of young people have argued that the competition for jobs is so ferocious and the rewards for winning are so meager. Why bother competing? So there's this whole culture developing of kids saying, I will do the absolute minimum I need to do to, you know, pay for food.
WOODS: This is China's Gen X kind of grunge slacker moment, is this?
WOODS: (Laughter) Will we see some Nirvana-like bands coming out of China from this era?
FENG: Some of these Nirvana wannabes may have met Yen Xiyun because she says she's encountering more slackers than ever.
YEN: (Through interpreter) Young workers don't want to work. The younger people, I feel, don't want to do hard labor.
WOODS: Xiyun has this whole spiel scripted out that she uses to help convince young people that factory work actually often pays better than office work, and it's worth doing.
FENG: But when I asked Xiyun what she hoped her own 12-year-old son would do when he grows up, she said this to me.
YEN: (Through interpreter) I hope he goes into the government. I hope he becomes a dragon.
FENG: She hopes he'll be successful - a dragon, as she says - but outside of the factory.
WOODS: Yeah. I mean, that kind of shows that the assumptions that have driven the Chinese economy for 40 years - that people of this limitless resource working in factories - we now know that that is no longer the case.
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WOODS: The show was produced by Brittany Cronin, who also did the voiceover, with help from Julia Ritchey and Isaac Rodrigues It was fact-checked by Kaitlyn Nicholas and was edited by Alex Goldmark. I'm Darian Woods.
FENG: And I'm Emily Feng. And THE INDICATOR is a production of NPR.
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