Will rising wages in China force manufacturers to go back to the US? A report of the Boston Consulting group suggest so, but economic analyst Arthur Kroeber tells in Euro Money that might be a wrong assumption.
Arthur Kroeber, non-resident fellow of foreign policy at the Brookings-Tsinghua Centre in China, is dubious of the affects of rising wages in China on American employment rates.
“The hourly labour wage-rate in the US is approximately $34 to $40,” says Kroeber. “In China, it’s about a 10th of this, at around $4 to $5 an hour. Even if Chinese labour costs are rising at around 15% per year, the large w age gap betw een China and the US w ill remain for much longer than predicted by the Boston Consulting Group.
“Inflation and rising interest rates in China will affect foreign investment in the country, but the Chinese government has planned for this. Investment will slow dow n in comparison to previous years, but it w ill still remain relatively high.
“Much Western investment and manufacturing in China is geared tow ards a Chinese market, thus there is little reason to move Western investment out of China.”
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- Why cutting income tax does not mean much – Arthur Kroeber (chinaspeakersbureau.info)