With Chinese wages rising at 15-20 percent per year, the labor content of production costs decreasing due to higher productivity, the Yuan value increasing some against the dollar and shipping costs rising due to high fuel costs, U.S. firms making products like furniture, transportation goods and electrical equipment will find it less attractive to build in China and import to the U.S. Adding plastics, rubber products, fabricated metal products, and computer/electronics as other industries identified by BCG could add as much as $ 100 billion in U.S. manufacturing output coming back to here.
China’s labor costs will rise above Mexico’s according to BCG(!). But the grerater availability of skilled workers in the U.S. will cause companies to locate at home rather than in Mexico.
So, perhaps the prediction of some economists that the lost U.S. manufacturing jobs will not come back has been a bit hasty. That could encourage those who have tended to call Economics the dismal science.