The Impact Of Rising Labour Costs On The Quality Of China’s Manufacturing Exports:Driving Or Suppressing?

The manufacturing industry occupies an important strategic position in the development of the national economy.Since the reform and opening up,due to the cost advantage brought by abundant and low labor,it has developed rapidly in foreign trade,and the scale of exports has been at the forefront.However,the quality of export products of the current manufacturing industry is still not high,and is still at a relatively low end in the global value chain.This is also an important reason why China’s export trade lags behind developed countries.At the same time,the report of the 19th National Congress of the Communist Party of China also proposed to realize the goal of "a strong country by quality".This positioning provides a policy guide for the research of this article.Therefore,in order to enhance the status of Chinese products in the international market,the export trade model must be transformed from the original product price competition model to the product quality competition model.However,in recent years,the cost advantage that the manufacturing industry relies on has been declining.The actual wages in 2017 were 3.50 times that of 2003.Under the dual background of rising prices of important input factors and building a strong trade country,recognizing and understanding the impact of rising labor costs on the quality of export products is of great practical significance to China’s upgrading of foreign trade and the adoption and formulation of relevant measures.Based on the New New Trade Theory,Efficiency Wage Theory,Induced Innovation Theory,Creative Destruction and other theories,this paper analyzes the internal mechanism of the rising labor cost on the quality of export products,and tries to introduce the wage factor into the model of Hallak and Sivadasan(2013),Trying to describe the mechanism of how wage changes affect the quality of profit-maximizing companies’ export products.This analysis may supplement and expand the theory of heterogeneity.In the empirical part,this article conducts two aspects of research:First,use the 2003-2017 data of China’s manufacturing industry to conduct an empirical analysis of the relationship between labor costs and overall export product quality,and use heterogeneity analysis for different intensive industries,and It further tests the robustness of the empirical results;second,this paper examines the mechanism of the effect of labor cost on the quality of export products through the two intermediary variables of labor productivity and technology R&D level.Through the above research,this article further draws the following conclusions:(1)Rising labor costs may affect the quality of export products through the following aspects:in terms of production efficiency,it may produce human capital effects and capital element substitution effects,which can improve production efficiency and promote the quality of export products;in terms of quality production capacity,It is also possible to improve quality production capacity and promote export quality upgrading through cost compensation effects and creative destruction effects;in terms of input prices,labor costs have always been a major component of corporate costs,and its rise may directly cause corporate profits to be squeezed and thereby reduce export quality.In addition,as far as the industry is concerned,labor costs may also produce resource redistribution effects,resulting in the survival of the fittest in the industry to indirectly improve the quality of the industry’s overall export products.In summary,labor costs may have positive and negative effects on the quality of exported products.Furthermore,this article introduces labor cost analysis on the basis of the quality endogenous theoretical model,and also shows that in theory,wages may have two effects on the quality of export products.(2)The current increase in labor costs in China’s manufacturing industry will promote export quality.After adjusting the endogenous problems and changing the measurement methods and independent variables of export quality,the conclusions are still consistent.At the same time,because labor cost is one of the main components of cost for manufacturers in labor-intensive industries,manufacturers are more likely to optimize their own efficiency and strengthen technological research and development to reduce pressure through other means.This means that relatively In capital-intensive industries,the quality upgrading effect of rising labor costs in labor-intensive industries will be more obvious.Furthermore,this paper found through mechanism testing that the rising labor cost of China’s manufacturing industry can indeed positively promote the quality of export products by forcing the improvement of technology research and development level and stimulating the improvement of labor productivity.Based on the above conclusions,this article believes that the current efforts to weaken the burden of rising labor costs,strengthen the positive effect of rising wages,and actively use the promotion effect of rising labor costs on production efficiency and quality production capacity are due to promote the quality of export products.Meaning.Therefore,the following suggestions are made:First,because the rising trend of labor costs has not subsided,enterprises may face increasing cost pressure,which means that the downward pressure on the quality of export products may increase.Therefore,it is necessary to reasonably intervene in the increase in labor costs,try to improve the wage level while achieving quality upgrades,and achieve a win-win situation for labor and capital.Second,focus on improving production efficiency,prompting export companies to favor quality competition rather than price competition under the pressure of rising labor costs.The government and enterprises can vigorously optimize the human capital structure of manufacturers by providing more training and learning opportunities for workers,and strengthen production efficiency to improve the quality of export products.Third,through the quality endogeneity model,we know that quality production capacity is another important cost factor that is different from production efficiency for manufacturers.Under the pressure of rising costs,companies should regard labor costs as a positive cost to promote their development,increase R&D funding and investment in technical personnel,and enhance technological R&D innovation capabilities;the government can optimize the pressure-driven mechanism for independent innovation of enterprises and scientifically evaluate needs Supporting enterprises encourage them to invest more in R&D and technological innovation,adding impetus to the upgrading of export product quality.