Is China losing competitiveness or moving up value chain?

Updated: 2014-03-28 18:18

By Wang Tao and Harrison Hu (chinadaily.com.cn)

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I. How does China's labour cost stack up internationally?

China's average wage in the manufacturing sector is still low compared with those in the US, Europe and Korea, but it is relatively high compared with those in many other emerging economies, already surpassing that in Mexico (Figure 1).

What stood out the most was perhaps China's rapid wage increase in recent years. Average manufacturing wage in urban units grew by an average of 14 percent a year in the past decade (Figure 2) and manufacturing wages in private companies have likely grown at a similar pace. The average official minimum wage has more than trebled since 2005 and increased by 80 percent since the global financial crisis (Figure 3). China's wage growth has outpaced those in most key trading partners and competitors (Figure 4).

Is China losing competitiveness or moving up value chain?

Is China losing competitiveness or moving up value chain?