Prolific economist and brilliant speaker George Magnus sees clouds on the (not very distant) horizon for China. In an FT op-ed today, he argues that manufacturing trends are moving in the US’s favour. China’s traditional strengths, such as low labour costs, efficient assembly lines, supply chains and economies of scale are fading in the face of rising wages, weak rule of law, poorly enforced intellectual property rights, skills shortages and the stifling of enterprise by large state-led corporations.
By contrast, the US remains the world leader in technology and innovation. Moreover, with the rise of additive (or ‘3D’) manufacturing, the advantages of proximity to target markets and centres of technological excellence will outweigh those of outsourcing to foreign countries.
How China’s new leadership will deal with this shift is one of the big questions facing the global economy in the foreseeable future.
Check out George’s acclaimed book, Uprising, here.