With wages in China rising at about 12 per cent annually after adjusting for inflation over the past few years, it’s easy to think that lower-cost countries such as Bangladesh, Vietnam and Indonesia will benefit.
But the conventional wisdom that China will attract less foreign direct investment (FDI) as manufacturing moves away is wrong, according to a new report from the Economist Intelligence Unit.
The main beneficiaries from rising labour costs on China’s coasts are instead China’s inland provinces, which will attract huge amounts of FDI in coming years.
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