NEW YORK – China’s economy is now taking its next great leap forward: parts of its manufacturing sector are now moving up the value-added chain and out of the country. The China challenge is now a global one.
The reasons are not difficult to fathom. Production costs (wages, office rents, land, capital, etc.) in China’s coastal provinces – where most of the country’s manufacturing and service production, as well as foreign direct investment, are located – have been rising fast. Since last year alone, minimum wages in nine of twelve coastal provinces (including Beijing) rose by an average of more than 21%.