Originally posted by: fuzzybabybunny
	
	
		
		
			Originally posted by: 3cho
there is such a huge trade deficit with china because the cost of labor there is so cheap, that's why chinese goods are cheap, making them more attractive than american produced goods. however, as china develops, those input costs will rise and the price of the chinese goods will rise. 
i suspect it will be the same people crying and moaning about cheap chinese goods who will bitch about expensive chinese goods in the future.
		
		
	 
I predict that companies will move to other sources of cheap labor. It's simply the nature of things.
As we move into developing economies we get the benefits of cheap labor and cheap production. At the same time we also slowly increase the quality of life in these developing economies (people have more purchasing power, labor gets more and more expensive, etc). When labor gets to be too expensive we simply move into new areas. In real life it's not so stepwise. Companies gradually move into new areas at the same time as labor rates increase in developing economies. 
You can see this right now in Vietnam and Cambodia, which are set to be tomorrow's China in production and labor. It'll take a while, but eventually I predict that we might come close to running out of really cheap labor, at which point companies will have to compete more on the merits of their innovative products rather than the cost advantages afforded to them by cheap labor.