For many years China has been the factory for manufacturers throughout the world but that may soon change. Many companies are now turning to cheap labor in Myanmar, Cambodia, and Laos drawing increased numbers of manufacturers to Southeast Asia.
Economists are now predicting that by 2030 more than half of China’s population will be under the age of 30. They will certainly be part of China’s emerging middle-class with high rates of consumption. The rise in China’s wages has forced many factories in China to also move to Vietnam, Laos, and Cambodia in order to take advantage of the cheap labor in those countries.
Many economists have stated that the Southeast Asian countries will most likely take up China’s mantle as being the ‘world’s factory.’ This will take place over the next 10-15 years as more companies move to take advantage of the cheap and abundant labor in that region of the world.
Many economists also believe that the Southeast Asian nations could lift their regional trade to $1 trillion by 2025. Foreign direct investment into the Southeast Asian market from the major economies could climb to $106 billion in 2025. Foreign investments into the Southeast Asian market have already eclipsed investment into China for the first time in 2013.
What will coincide with this economic growth shift in Southeast Asia will of course be the low income labor market in places like Myanmar, Cambodia and Laos, cost-effective manufacturers in Thailand, Vietnam, Indonesia and the Philippines, and sophisticated producers in Singapore and Malaysia. Southeast Asian nations have resolved to establish the Asian Economic Community by the end of 2015 to enable the free movement of goods, services, capital and labor between the 10 member states.
The rapid economic growth may now be slowing down in China but the higher standard of living has given hundreds of millions of Chinese the disposable income needed to boost their domestic economy.
China is now moving away from being the manufacturing factory of the world to a more domestic economic powerhouse for their own Chinese market place. China’s domestic economy has now surpassed the U.S. economy due mostly to China’s larger and continuously growing middle-class.
The shrinking middle-class in America is having an adverse effect on our Country’s standing in the world. Most economists seem to agree that there are no quick fixes to prevent our country from becoming the world’s second superpower behind China in the not so distant future.
But, as I've said before, I suppose only time will tell …
- Always with love from Suzhou, China
Thomas F O’Neill
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