China city dwellers exceed villagers for first time

Tue Jan 17, 2012 5:53am EST
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By Zhou Xin and Koh Gui Qing

BEIJING (Reuters) - More people lived in China's cities than in the countryside last year for the first time in history, a milestone that also points to labor supply strains in the world's No. 2 economy that could redraw the global manufacturing landscape.

Just over 51 percent of the 1.35 billion mainland Chinese lived in towns and cities at the end of 2011, China's National Bureau of Statistics said on Tuesday, crossing the halfway mark after three decades of rapid growth in the world's most populous nation.

Factories along the Pearl River Delta boomed in the same period as hundreds of millions headed to cities in search of jobs, helping to keep costs low. But an expert on development in the delta said workers are now increasingly demanding higher wages and better terms as urban property and living costs soar.

"It's a clear signal to all investors -- China's cheap labor is fading into the past and will never be back," said Cheng Jiansan, a professor with the Guangdong Academy of Social Sciences, the top think-tank in China's export hub.

"As far as I know, many plants here are relocating to places like Vietnam and Cambodia -- simply for cheap labor."

China became the factory to the world since economic liberalization began in the early 1980s, exporting goods such as high-end running shoes and television sets as low-cost labor spurred manufacturers around the globe to setup operations mainly in special economic zones along the southern coast.

In 2011, China's rural population fell 14.6 million, equal to the number of people in Cambodia, data showed.

But the rate of urbanization has slowed, dragging on labor supply, even though the massive shift of people will keep driving China's economy for years to come.   Continued...

<p>People throng the Nanjing Road shopping district in Shanghai April 30, 2011. REUTERS/Aly Song</p>