News in July

Wage increases are threatening China's competitiveness, but improved productivity and other advantages mean it will continue to attract investors, analyst said.

China will no longer be a competitive place for production, given the strong rise in the cost of production, the bank said.

BCG(Boston Consulting Group) said US technology giant NCR has moved its manufacturing of ATMs to a factory in Columbus, Georgia, that will employ 870 workers as of  2014 - an example of major manufacturers leaving China.

Adidas announced recently that it would close its only directly owned factory in China, becoming the latest major brand to move its manufacturing to cheaper countries, though it maintains a network of 300 Chinese contractors.

However, not all economists believe China will lost its manufacturing edge, due partly to improvements in productivity.

"Most of the increase in wage have been offset by strong productivity growth", said Mr. Louis Kuijs, project director at the Fung Global Institute, a research body that specializes in Asian economics.

China's coastal areas offered an effective business environment that would continue to draw investors, as would lower costs in inland provinces. These advantages could limit a shift in manufacturing to lower-paying countries, such as Vietnam, Bangladesh, Pakistan, and Indonesia.

Guangdong and other coastal provinces have a superb advantage over most of S-E Asia and South Asia in their efficient supply chains, strong economic of scale and reliable business environment.

The manufacturing that does leave coastal China is not only looking to S-E Asia and Eastern Europe, but also inland China, where land, wages and energy are cheaper.


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