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Manufacturing in China has future Manufacturing in China has future
Manufacturing currently makes up around 47 percent of China's gross domestic product (GDP), compared with 23 per cent in the United States.

Alexander van Kemenade, an analyst with the China Regional Forecasting Service for the Economist Intelligence Unit (EIU), said speculation of a mass exodus of manufacturers to cheaper locations such as Vietnam and Bangladesh was alarmist. 

"I would say it was very overblown. I would give it 100 years maybe before China has the same level of manufacturing as the United States," he said. 

There is little doubt that increasing labor costs in China will have some impact over time. 

The hourly labor rate for apparel manufacturing in China, according to EIU statistics, has increased by 14 percent since 2009 to $1.84. 

It now costs nearly four times as much to employ a Chinese worker in the garment sector than someone from Vietnam, where the hourly labor rate over the past year has increased by just 2 per cent to 49 cents. 

China still has cheaper labor rates than India, which is keen to develop a bigger manufacturing sector to match its already thriving service industries. The hourly rate in its apparel industry is $2.99, up 17 percent over the last year. 

"I think the companies that will be looking to move to other countries such as Vietnam, India or Bangladesh are those in cost-sensitive industries including garment production," said van Kemenade. 

"It is feasible for them because they want to make 20-year decisions. Their concern about China is that if they move inland to other provinces they will face similar pressures as they currently do in the richer coastal provinces in just a few years. Labor rates and land prices will increase. They will then have to rethink their strategy again." 

No one can deny that increasing wage rates in China is not a significant issue. The average annual manufacturing wage in Guangdong, China's industrial heartland, increased by 144.2 per cent from 1998 to 2008, according to EIU figures. 

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