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PacNet #71 – China: The Costs of Hyper Growth

China’s high-growth dependency on fixed-asset investments has brought with it high energy costs, opening a Pandora’s box of inflation, raising costs of production, transport costs, and labor wages, while reducing China’s competitive advantage and threatening to roll back economic achievements that characterized the China economic miracle. These high costs are driving many foreign manufacturers to pull investment from China to relocate in more efficient labor-intensive countries such as Vietnam, Malaysia, and Indonesia, where wages and corruption are containable.