China decides to stay home and invite everyone around

N Balakrishnan: Traditionally a provider of labour to the world, the good times have led to a turnaround for the emerging Asian giant. Now all it needs is a framework for immigration.

Employees at a Honda car parts factory went on strike in China demanding an increase in wages.

Most people in the developed world think of China as a bottomless pit of cheap labour. But the strike in the Honda car parts factory in Guangdong province and the offer of a 30 per cent pay rise by Foxconn, the company that makes iPod under contract, show the days of docile, cheap labour in China have ended.

Now workers from other countries are going to work in Chinese factories. Workers from Vietnam, where the wage levels are half that of China, can be found in the factories of southern China and Hainan Island. Most of these foreign workers are illegal but their presence is still tolerated as the factories need them to keep operating, with more and more Chinese workers shunning those jobs or demanding higher wages.

Vietnamese are not the only foreigners coming to China in large numbers. China has borders with many countries and cultural ties with its diaspora across the globe, so there are people coming into China from Myanmar, Korea and ethnic Chinese from various South East Asian countries. An estimated 1 million Taiwanese are said to be living in Shanghai city now, a very large number considering the whole of Taiwan has a population of only about 22 million.

Wage levels for expatraite accountants in Shanghai are about twice those earned by Malaysian Chinese accountants in Malaysia - so companies in Malaysia are having difficulty recruiting accountants. These days Filipina maids are not a rare sight in China, where they have become status symbols and are expected to combine household duties with the extra role of being an English tutor to pampered children.

And of course, there are the investment bankers from the US and luxury goods salespeople from Europe flocking to China to take advantage of the booming economy. There are so many traders from Africa in Guangzhou now that some areas resemble an African city and reverberate to the rhythms of music from that continent. Official statistics no doubt underestimate the number of foreigners. The immigration bureau at the ministry of public security says 2.85 million foreigners - or more than 10 per cent of the 26.1 million who entered China in 2007 - came for employment.

China's national census, starting in November, will try to count the foreigners for the first time so more accurate data may be available after that. Historically a country that supplied workers to other countries rather than as a country that received people from elsewhere, China does not even have proper immigration laws yet, having dealt so far with arrivals on an ad hoc and sometimes arbitrary basis.

But the fast-changing labour scene is finally forcing the country to work on a comprehensive immigration law. The proposed law is expected to work along the lines of those in developed countries and classify immigrants according to whether they are skilled or unskilled, with categories for wealthy foreigners who wish to invest and live there. Foreigners living in China's major cities already enjoy a very high standard of living in terms of creature comforts with world-class transport, supermarkets and entertainment facilities.

They only complain about modern medical care being either too expensive or unavailable, and the same goes for western-style education. Health and education in China are not yet fully open to foreign investment and no doubt once that happens the situation will be improved. If those two factors become available and affordable, developed countries such as Australia and Canada might have to start worrying about China as competitor not just in consumer goods, but also as a magnet for skilled migrants from the world.

This is a situation the poor Chinese coolies who crossed the oceans in crowded ships to work in the Americas, Australia and South East Asia 100 years ago could not even have dreamt about. [e-mail]