China is losing ground in auto manufacturing to Mexico, as wages rise for Chinese workers at a faster clip than in Mexico. The FT reports that a Mexican auto factory worker now makes about $3,645 a year, compared to $5, 726 in China. The cheaper cost of doing business in Mexico means the country’s auto industry has been attracting more foreign direct investment: 12.6 of the global total in 2013 compared to China’s 12.4. Foreign direct investment is going to the country with the lower wages.
But China has a secret comeback weapon: robots. An army of them, in fact: by 2017, it should have 428,000 “operational industrial robots,” double its current stock. That could help China attract more investment by lowering manufacturing costs, but not in a way that will benefit auto workers.
International competition and automation, that is, are slowing the growth of manufacturing wages around the globe. This has big implications for future social stability in the developing world. It also means that manufacturing jobs will never never never be the base of the American middle class again.