#china keeps trying to find the magic solution to its growth problems as well as its Real Estate problems to support its markets without damaging the currency. For years, China has been, and continues to be, the manufacturing engine of the world, from textile to technology. However, as you can see in the chart below, unit labour costs per hour have ramped up 4X over the last 15 years. #covid19 changed logistics, work habits and showed everyone the conflict between efficiency and resiliency. Now, other Southeast Asian countries, and India, with significantly lower labour costs, are becoming more competitive, and the concept of onshoring has come up in every corporate earnings call. China’s problems might not be cyclical after all, but structural, and perhaps the country needs to go through a comprehensive reform to turn around its economy and the comercial relationship with the rest of the world.
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