China continues to lose its edge at producing low-wage goods. In the face of rising wages and waning Western demand, the production of textiles and other manufactured goods is shifting out of China and into Southeast Asia, where wages remain low. The Financial Times reports:
The association of Chinese textile exporters said last week that garment exports fell 0.2 per cent in the first seven months of the year, compared with a 24 per cent increase in same period last year. China’s garment exports in 2011 totalled just under $250bn, which may mark a peak.
Chinese officials have insisted that this drop merely signals a shift to high value-added industries on the coast, and that the strategy is for low-wage manufacturing to move into the interior, where land and labor are cheaper.But as the United States and other countries have learned, we can’t all have high-paying, high value-added manufacturing jobs. China’s real problem is that rising productivity in manufacturing will ultimately mean that it takes fewer hands to build the goods that the world wants. Even in China, making “stuff” is not going to be enough in the 21st century.