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The latest report on China's population and labor issues published by the Chinese Academy of Social Sciences pointed out that the supply of rural labor can no longer meet the urban demand.

Economist Arthur Lewis was the first to define dualistic economic development. He held that in developing countries labor transfers from agricultural sectors to industrial sectors.

He concluded that in the first phase of development the wage level of industries is 30 percent higher than that of agriculture so that modern industrial sectors can obtain as much labor as needed at a relatively low wage level.

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But in the second phase of development as labor becomes scarce, wages will increase. The fruit of economic development will be distributed between the agricultural and industrial sectors and between capital and labor. China is gradually leaving the first phase, and the age of low wages is coming to an end. How to gradually increase wage levels is a key step for sound economic growth.

Criticism of China's low wages is not new. The gap between the rich and poor is already quite alarming.

Currently, farmers and migrant workers do not have much to spend. The approaching labor shortage is a great chance to increase the wages of industrial workers and thus boost their spending power.

It is foreseeable that labor costs will increase in the near future. It will be a painful period for economic development.

Currently the best solutions are lowering operating costs and improving efficiency. The industrial structure should be upgraded. Overlapping construction should be banned. More capital and technology-intensive industries should be developed.