Developing appropriate technology and labour training programmes, expanding the higher value-added components of the manufacturing supply chain and liberalising the labour market are vital to sustaining manufacturing growth in China, according to Professor Eden Yu Siu-hung, Associate Dean and Professor of Economics at the College of Business, City University of Hong Kong (CityU).

He was speaking at the 3rd Globalisation and Economic Policy (GEP) Conference in Ningbo, China, on 9 November. The conference was titled “Enterprise and Labour Market Adjustment in China’s Transition”, and was organised by the Leverhulme Centre for Research on GEP and the School of Contemporary Chinese Studies, The University of Nottingham, together with Fudan University and Zhejiang University.

A keynote speaker at the conference, Professor Yu presented a paper that investigated the determinants of labour demand across the manufacturing sectors in China using data collected from 158 manufacturing industries between 1998 and 2007.

“Increasing output will lead to a rise in the demand for labour, while higher wages will result in a decline in labour demand,” Professor Yu said. “Technical progress can also result in less labour demand, for example, in the low-technology sector of the Pan-Pearl River Delta region and the western region of the country; the medium-low technology sector of the northeast region; and the medium-high-technology sector of the Yangtze River Delta region and the northeast region.”

But, Professor Yu pointed out, technical progress could also promote demand for labour in the medium-high technology sector in the Pan-Pearl River Delta region, as it is mainly engaged in the processing industry.

“China should accelerate its innovation drive,” Professor Yu added, “as innovation and technical progress could help upgrade manufacturing profiles, thereby leading to a greater demand for labour in the relatively capital/knowledge-intensive sectors, e.g. the medium-high-technology.”

The next GEP conference will be held in November 2011. According to a proposal from Professor David Greenaway, Vice-Chancellor of The University of Nottingham, the conference will include a joint workshop at CityU. The University of Nottingham has close academic ties with CityU, including faculty collaboration and student exchanges.