Variant Perception Writes “The meteoric rise in Chinese exports now appears to be losing steam with world export market share falling by 1%-point over the last two years and potentially mirroring Japan’s long-term retrenchment. Doubling of wages (in USD terms) and a near 40% real effective appreciation over the last decade have undermined the low-cost export model.
In addition to higher wages pinching exports at the low end, China has yet to make the transition to high-value, high-tech exports, where price competition is less intense. Despite a reasonably high weighting of high-tech exports (56%), the composition has not substantially changed over the last decade and remains comfortably below the likes of Korea and Taiwan, which have managed to escape the middle-income trap. Moreover, this comes at a time when Poland, Vietnam and India have made great strides.