China becoming less competitive?

[landofsmiles]

Interesting article about labor and other costs on the rise in China:

http://news.ft.com/cms/s/6bc1de9e-b9ce-1...e2340.html

It's actually happening all over Asia. And then add rising shipping costs on top of that. I think that competition might just be the great equalizer.

[mandy]

Labor costs are rising in China, India, and other countries but equalization might take decades in Asia.

In India, hundreds of millions in the Indian lower classes living on $1 a day or less could provide a largely untapped new source of cheap labor for both International companies and growing domestic (Indian) industries.  In China where the government keeps tight control over the economy, any sign that rising labor costs are making the country less competitive are likely to be met by wage controls.  Multinationals will increasingly utilize cheap labor forces in Indonesia, Vietnam, Pakistan, and other nations as costs in India and China rise.

The difference in labor costs between the West/Japan and emerging Asian economies will decrease over time, just as it did between the West and Japan, but I believe the equalization process will take far longer in China and India than it did in Japan.

I don't think the outsourcing trend in the West will end this century because after Asia there is another largely untapped source of labor called Africa-although the AIDS pandemic could slow any large scale move to tap into Africa's cheap labor.

I do however think the West's domination of the world's economies will end this century. London and the UK were the centers of financial power in the 19th century, New York and the US in the 20th, and this century I see Dubai replacing New York as the new financial capital of the world and acting as the gateway to this century's new center of world economic power in Asia.

[xppman]

I was watching a documentary on this a few months back.
It was focusing mostly on India's roll in the world of outsourcing.

Very interesting trends and I agree that we will continue to see
a shift away from the west's economic domination.

The signs are seen everywhere and all of Asia's rolls in production
of goods is and will continue to be the intricate part of that shift.