Is China Losing Its Competitive Edge?

Declining competitiveness: More than half (54%) of companies surveyed believe that China is losing its competitiveness to other low-cost countries. Seven out of 10 respondents cited the rising renminbi as a major reason for China’s decline, while wage inflation was cited by 52% of those polled. Wages for white-collar managers and blue collar workers have jumped 9.1% and 7.6%, respectively. Staff retention is also a major concern, with 33% of respondents citing it as a reason for lost competitiveness. At the same time that costs are increasing, China is lagging behind global standards in many opera-tional dimensions, most notably in logistics infrastructure, trade environment, access to technology, management capabilities, and protection of intellectual property.