China Stole the Productivity Revolution

It's hardly possible to avoid writing about China today. Even if it has little to do with security. So I'm going to write about three-packs of knickers for EUR 3, or mobile phones for EUR 10.

Everyone can see that the Chinese cities are getting rich. There are still plenty of people living squalid lives with little money, but the gloss is there and, more to the point, there are more and more hard-working middle-class people. Today, it's the cities and the coasts, but if they can hold on to the currency, the banks and the economy, it'll be the whole country soon enough.

Now the point about hard-working middle-class people is that they don't stitch supermarket knickers or assemble disposable mobile phones. They're too expensive. So we have to ask, once the opulence has worked its way into China, where are our panties are going to come from then? (and theirs too, of course.) Bangladesh/Nepal/Burma just doesn't have the slack to take up the produce of three hundred million pairs of willing hands. India is on its own way already, and Africa is disorganised and thinly populated.

I see the answer to this question taking us back to, ooh, 1978 -- the Year of the Micro. Back then, the unions were huge, offshore manufacturing was inconceivable and the promise of cheap micro-processors was in the robot factories that would provide a life of leisure and customised goods for all.

Well, it didn't work out that way. No. Hey! it's thirty years later -- 2008 -- the future in anybody's language -- and

• If I want a suit, I can't walk into a shop and be measured up by a machine which will cut it, make it and post it to me.
• Mrs U had to buy a Toyota instead of a Nissan because the seats are too long for her thighs and there's no opportunity to get it changed.
• Children's toys are hand-assembled -- and that's not snap-together either. There are dozens of screws -- easy to design, simple to tool, but needing a lot of work to asemble.

How crap is that? What went wrong?

Offshore manufacturing is the answer. There's no point in tooling up with fancy kit if the competition can have it made by hand for less. For a huge range of goods, manufacturing has gone backwards these last thirty years -- those screws in the toys weren't there when I was young. The products are cheaper, more varied, generally better assembled but totally uncustomised and insusceptible to automation.

So my guess is this. When the supply of cheap labour dries up, we're finally going to get the automatic factory revolution. Only, it'll be thirty years better. It'll be lead by the Chinese, because they're the ones with the problem and it's going to suit their convenience not ours. But I feel that I'm within five years of getting my machine-measured suit. It's going to be more expensive than the one stitched in a Fujiian sweatshop. But at least it'll fit.