Raising wages no cause for alarm

A well-known scholar with the Chinese Academy of Social Sciences surprised many recently when he cautioned against raising wages too quickly. Doing so, he warned, would place undue financial stress on businesses.

Personal incomes in China have grown slowly over recent years - far slower than the broader Chinese economy. Similarly, State-owned enterprises have historically outpaced private enterprises in terms of profit growth.

Despite the widening disparity between national wealth and the wealth of ordinary Chinese individuals, policymakers are now looking to consumers to fuel economic growth. Over the long run, insufficient income gains will crimp purchasing power and create supply imbalances within the consumer sector. Left unchecked, such an outcome could have serious economic repercussions. Indeed, recent years have seen dwindling consumer demand and wavering consumption power wreck havoc in Europe, Japan and the US as well as a slew of emerging-market nations as well.

Chinese authorities should explore all possible opportunities to increase wages for ordinary citizens, including strengthening minimum wage laws.