April 2014 International Economic Fundamentals

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China's cheap factories face new challenge as economic growth inexorably slows





HONG KONG - As China's growth inexorably slows, manufacturers such as Linan Meite Cable are discovering that being an efficient low-cost producer is no longer enough to prosper.





Factories that had thrived by using cheap migrant labour to churn out inexpensive clothing, electronics and toys for export now face changing government priorities as a growth engine based on investment and trade loses its momentum after more than a decade of double-digit expansion.





At the same time, China's labour costs are rising and global demand is still weak, putting pressure on manufacturers to move into more advanced production, consolidate into bigger entities or shift to cheaper inland regions to survive.





Read the full article here.