Report says China’s export competitiveness will wane

A report from Morgan Stanley & Co. International indicates that China is losing its edge on export competitiveness. According to the report, “This margin squeeze comes from both sides: cost — Chinese unit labour costs grow vigorously as wage inflation increasinfly outstrips productivity growth — and revenue — as currency appreciation agains the dollar lowers revenue once dollar export receipts are converted back into the renminbi.” Report authors Spyros Andreopoulos and Sung Woen Kang note that the implications are higher prices for imported Chinese goods over the medium term. The Toronto Star offers a Canadian perspective in a recent article.