Job Discussion Forums

[Non Sequitur]

The Chinese seem to have recognised that the 'game is up' as far as holding the value of the RMB down in relation to other 'Western' countries.
Will the Chinese try to reduce RMB salaries?
Will they use the better purchasing power to recruit higher qualified teachers?
or will they let their long suffering FT workforce get a bit of financial relief at long last?

[johntpartee]

[randyj]

Whatever happens to the Chinese currency with respect to Western countries in the future, I question whether such a change will directly affect salaries within China. Granted that RMB appreciation would make imported goods less expensive in theory, we are still living on the Chinese economy, which has itself experienced considerable inflation recently.

[Teatime of Soul]

There are no indications of further float to the RMB.

Given the problems with the Euro and the dollar, Chinese leaders are being extra cautious.

[Non Sequitur]

'What do you base this on'
'There are no indications of a further float of the RMB'
Hello?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10647210
The US was 'asked' to hold off on a report condemning PRC's currency manipulation to give them (PRC) chance to finally agree to let the RMB move up to its rightful value.
The financial press is full of it.

[gene]

That was before Greece and the problems with the dollar and Euro...

[Non Sequitur]

We are talking about long-term realignment, not blips.
Both the Euro and the greenback have rebounded overnight.
Now, after 130-odd views and several posts, can anyone comment on or answer the questions in the OP?

[cormac]

I doubt very much that you'll see any rise in salaries for FT's... There's plenty of FTs coming to China as it is.. Only a serious drop in availability of FTs would possibly increase salaries.

[sojourner]

Nothing would make me feel more happier than if China were to float the RMB - which, in the present situation would significantly appreciate the value of that currency, helping me to have cheap holidays in Malaysia and Thailand, as well as to build up my retirement fund !

When I first came to China to teach, way back in December 2002, the AUD was worth around 5 RMB. A few months ago the rate was hovering between 6.5 to 6.8. In other words, having such a "cheap" RMB meant that I got less AUD (or any other foreign currency, for that matter) whenever I left China during the holiday breaks. Also, as someone else has already remarked,a "cheap" RMB means that imported goods on sale in China costs more. Over the past few days, the rate with respect to the AUD has been around 5.8 - that's ok, but, I would love it to be around 5, as was the case just a few years ago !

Of course, such exchange rate differences are not all due entirely to Chinese import/export figures, prevailing current a/c situation, or even to the machinations by those within the PBC/Finance Ministry - much also depends on the economic situations with respect to China's trading partners. But,China feels that by acting contrary to market forces, through artificially keeping the RMB at such a "cheap" price is "good" for the country - helping to boost export sales, thus reducing the unemployment level through absorbing excess rural workers into the (mainly) expanding export-oriented manufacturing sector.Consequently, the authorities would feel that if the RMB were to significantly appreciate in value, exports might fall, leading to higher unemployment, thus resulting in more "social unrest". Possibly, but it could also be argued that an appreciation in the value of the RMB, through making imports cheaper, has the potential to benefit China, at least in the medium and longer term, by making its economy less reliant on the export of cheap, labour-intensive products.This could come about as a result of manufacturing firms , thanks to an appreciated RMB, not only being able to reduce some costs (resulting from lower prices for essential imports) but also finding it less financially prohibitive if they want to buy sophisticated capital equipment from o'seas. Such capital equipment would enable its workers to become more productive than they currently are - such higher productivity, possibly, neutralising any loss of short-term competitive advantage arising out of the effect upon labour-intensive industries through RMB appreciation.

However, to take advantage of such a currency revaluation in order to revamp industry, it would also be necessary to retrain workers. Possibly in the medium and longer terms, the authorities would have to devise out ways to make technical training/education more attractive to secondary school leavers. Currently, it would appear that many young people look down upon technical training, prefering to attend a uni - even if it means graduating in some generalist discipline which might not have much relevance to relatively well-paid jobs in industry.Thus, should technical education ever become popular in China, less students might want to do a BA at uni - resulting , possibly, to a lower demand for FTs to teach English - which in effect could mean lower salaries for us !

Of course, the above would depend very much on whether there is a significant cultural change re the worth/attraction of technical education vs a uni education in the humanities. More likely, what could come about as a result of a significant appreciation in the value of the RMB would be that more FTs would consider working in China.In recent years, the "cheap" RMB has been a considerable disincentive for those FTs who want to save as much as possible and then to take their loot out out of whatever country they happen to be teaching in .Consequently, a significant currency appreciation, resulting through a true "float", would make China very attractive, indeed. However, with China becoming more attractive for FTs, many schools/unis might take advantage of such a situation to lower our salary levels and reduce our benefits - in other words, the operation of the law of supply and demand !

Our salaries could also drop as a result of an appreciation of the RMB due to many of the more affluent middle-income earners coming to the conclusion that they can now afford to send their offspring to colleges and unis in Aust/NZ - or, even, further afield - rather than to run-of-the mill 2nd or 3rd tier unis in China .Thus, a further potential threat to FTs' salaries through the operation of the law of supply and demand ! But in such a situation, there could well be something else that FTs might want to consider. To remain competitive in the face of the growing attraction of foreign unis, the 2nd/3rd tier outfits in China would have to considerably lift their game. For example, they might want to consider revamping their curircula and teaching methods in order to give the impression to potential customers that they are somewhat on par, academically speaking, with foreign unis. Such a situation might well result in FAOs becoming more discerning as to who they recruit - possibly, a "BA + CELTA" might no longer be seen as sufficient in order to land a uni job.Thus, those with more advanced qualifications might find themselves to be at a premium - and, therefore, in a comparatively good position to bargain for a decent salary ! At the same time, more Chinese unis, in the face of overseas competition resulting from a significant appreciation of the RMB, might consider entering into joint-venture arrangements with foreign unis. Again, this could benefit (salary-wise, at least) well-qualified FTs - but, at the same time, could involve much more pressure on the part of those teachers, especially considering that their courses' teaching content and assessment procedures will have to be more in line with the requirements of the foreign uni partner.

In conclusion, at least in the short term, a significant revaluation of the RMB would benefit most of us. Not just in imported goods becoming cheaper, but also in getting more foreign exchange for our RMB when we leave China ! However, in the medium and longer terms, there could be a number of other consequences that could come about through the unleashing of competitive forces - some a bit more likelier than others. One highly likely outcome in the short term is that an appreciation of the RMB could well act as an incentive for more FTs wanting to come to China - a situation that could have a downward affect upon our salary levels; unless one possesses some significant competitive edge, such as having completed some advanced qualification or having had many years of teaching experience . The other scenarios that I touched on may/may not eventuate;but, if they were to come about, again, it would be those FTs with advanced qualifications or lots of experience who, not only would have the best chances of surviving, but of actually coming out "on top" (hopefully !). So, if you're been toying for some time with the thought of doing a DELTA, M.App.Ling.,etc, it might be a good idea to do something about it. If anything, such credentials will help you to get a better/more interesting position now - and, as for the future . . .

Peter

[bradley]

It probably wouldn't affect my life. I don't have bills to pay back home. I stay in China for most of the year.

[China.Pete]

"The Chinese seem to have recognised that the 'game is up' as far as holding the value of the Remnimbi down in relation to other 'Western' countries. " -- Non Sequitur

Any deliberate revaluation of the Remnimbi is likely to take a back seat to the financial turmoil in Europe, one of China's most important markets, where its currency has already realized a significant appreciation against the Euro. As for FTs' salaries, they are unlikely to be affected over the short to medium term by currency fluctuations (unless, of course, these fluctuations are so severe as to badly damage the Chinese economy). Its effect on the internal labor market is more likely to be felt in terms of existing FTs choosing to stay or leave based on the pricing of salaries in their "home" currency, or by new wage slaves deciding whether or not to come here based on the same consideration. Realistically, salaries for the vast majority of ESLers are low enough by Western standards that I doubt it would be a major deciding factor in most cases anyway. But I would agree with those who have suggested that a gradual rise in the value of the Remnimbi that accompanied continuing economic growth might fuel further demand for FTs from Chinese students who are interested in studying abroad. Such specialized teaching jobs do sometimes pay higher salaries on average than typical ESL jobs would.

[Teatime of Soul]

Non sequitur:

[Non Sequitur]

Getting away from the OP a bit but one opinion I agree with is that teaching in China will be seen as part of a formal teaching career. This means as 'better' qualified people are attracted here, existing teachers should consider upgrading quals or resign themselves to being compressed back into the hard to recruit areas.
On the macro-economic front, bear in mind that a revalued RMB has attactions for the Chinese government as well.
It tends to be anti-inflationary as less profitable exports are redirected to the local markets.
Also, mall-obsessed Americans should remember that it takes a lot of pairs of jeans to buy a Boeing airplane. Chinese purchases of big ticket items will be more affordable.
As to a dismissive attitude by the Chinese to calls for revaluation, they will not be oblivious to the Japanese experience. Japan thought it could flout the world by holding the Yen low. Then one day the US unilaterally devalued!

[gene]

http://www.businessweek.com/news/2010-05-28/china-yuan-forwards-erase-losses-this-week-money-rate-surges.html

[Teatime of Soul]

Might not want to put that down payment on a new QQ car just yet.

Quod licet Iovi, non licet bovi