A Chinese lifeline for American workers
As wage inflation in China pushes up the cost of offshoring, “Made in America” starts to look a lot better
http://www.salon.com/2011/12/16/a_chinese_lifeline_for_american_workers/singleton/
As happened in Japan, Korea and pretty much everywhere else, labor rates in China are starting to skyrocket, thus pushing the price of goods up. Soon (in the next 5 years according to the article’s author), it will be cheaper (somewhat) to produce goods in the US. This assumes, of course, that the Chinese government is able to deflate their housing bubble without causing it to pop (like it did here). There central control over the economy and longer outlook by their government operators gives them a greater chance, I think, than we had here in the US, but their government is at least as corrupt as ours is (well, perhaps that isn’t fair to them, but their government certainly is corrupt). Plus, they have allowed market forces greater and greater influence on their economy (it could hardly have grown at the pace it has if they hadn’t) and now the central control is a lot looser and less effective than before, so I put the chances of them of being able to gently deflate their housing bubble at below 50%, so I consider it more likely they will have a crash. Of course, our crash could have been handled immensely better, so they might do a way better job in handling the crash, so they might recover way faster. It will be interesting to watch, but I suspect that if you want to maximize your portfolio over the next decade, you should consider the manufacturing industry here in the US and shift some money from services to goods.
