With the Chinese Yuan (RMB) now firmly at 6.48 against the US$ the doomsday protaganists are already forecasting the demise of China as the world’s mega exporter of inexpensive goods.
For sure the sneaker and T-shirt manufacturers will be scurrying off the Bangladesh, Vietnam or Ethiopia where labor rates are still close to near slave money. Just as they have done over the last 30 years skipping from one country to another – wherever offers the lowest rates.
But China has moved on. While everyone has been marvelling at the amazing growth in China over the last decade, fewer have noticed the amazing industrial and commercial infrastructure that China has been furiously building. And all of this is designed to compete head-on with Western industrial countries when the Yuan reaches its real value.
The obvious indicators are the thousands of miles/kilometres of roads, high-spead rail, airports, communication networks, etc. Behind the scenes are the new vocational colleges and schools turning out apprentices by the hundreds of thousands.
Can Bangladesh or Vietnam or Ethiopia produce amazing engineering, consumer goods or IT technogies like China? The answer is of course no. Not by a long shot.
China will remain a relatively low cost manufacturing base for many, many years to come and, all the while, increasing its quality base. Chinasavvy, for one, will be there.
Yes, there’s a lot of life in the export manufacturing base of China even when the Yuan strengthens even further.