When Will China Be More Expensive Than The US?
- 30% annual increase in China’s wage rates. This is in line with Chinese wage inflation over the last several years.
- 5% annual increase in the strength of the yuan. A widely accepted estimate of the under-valuation of the yuan is 20% - 25% relative to the U.S. dollar.
- 5% annual increase in freight rates. This is a reasonable assumption based on increasing fuel prices and stabilization at pre-boom and bust levels.
Source: Alix Partners (2011). U.S. Manufacturing-Outsourcing Index. Retrieved 09/25/2012. Available at: http://www.alixpartners.com/en/WhatWeThink/Manufacturing/ 2011USManufacturingOutsourcingIndex.aspx