Chinese manufacturing wages increase; may drive manufacturing offshore

Strong wage increases for workers in China's manufacturing industry could catch up to the US and Europe within five years, analysts say.

According forecasts by French investment banking firm Natixis, China "will soon no longer be a competitive place for production given the strong rise in the cost of production," reports.

This is good news for Australian manufacturers who have been competing with mass produced Chinese goods that could be manufactured at much lower rates.

The report states that within four years wages would equal those of the US, and within seven it would be at the same levels as Japanese manufacturing workers.

These predictions come as a number of large global manufacturers move their factories out of the nation.

Boston Consulting Group has stated that by 2015 manufacturing in the US may be "just as economical as manufacturing in China".

Its comments have been backed groups such as NCR moving out of China and into the US, while Adidas will close its only factory in China to move to nearby cheaper nations.

According to the Natixis report wage hikes of up to 14% could encourage manufacturers produce their goods elsewhere, where labour costs are lower, such as former Soviet states.

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