Global Economic Prospects 2015

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Submitted by Anonymous on
Increase in Chinese labor cost may, of course, hurt the market for low-value manufacturing production (and related FDI). In fact, according to a recent survey among 1600 German manufacturing firms, 20 percent said that they are planning to pull out from China due to cost-consideration. This said rising wage rates are supporting the appeal for China for market-seeking FDI. In 2009, more new cars were sold in China than in US, a fact that attracts foreign car manufacturers. So at the end, it is the composition rather than the value of FDI that might be changing. In addition, moving towards higher value-added manufacturing FDI has been part of the Chinese government's FDI strategy for the last few years. Dilek Aykut