The End of Cheap China is near – Shaun Rein

The upcoming presidential elections in the US, cause a rise in tensions with China, business analyst Shaun Rein observes in Forbes. An advanced warning from his upcoming book The End of Cheap China.

Shaun Rein:

As a patriotic American who has lived in China for much of the last 15 years, I am saddened seeing the tension rise, and I don’t think a new cold war is out of the question. Much of the strain comes from a misunderstanding, sometimes willful, among many in the West about how China is evolving, and from the perpetuation of simply wrong ideas about the nation. For instance, New York Times columnist and Princeton professor Paul Krugman calls China a “bad actor” that is “stealing” American jobs by keeping the value of its currency low.

In my new book, The End of Cheap China, I argue that analyses by Krugman and others do not hold up to even basic scrutiny, and I describe not only the true disruption China’s rise could cause but also the opportunities it offers for American job creation.

In one chapter I analyze China’s currency and show that China’s manufacturing beats America’s because of superior infrastructure and efficient labor pools, not because of a manipulated currency, as Krugman argues. I point out that China is no longer a cheap place to do business. Not only did its currency appreciate by 8% in the last year, but 21 of China’s 31 provinces increased their minimum wage this year by 22%. Office space is more expensive in Shanghai than in many Western capitals. Currency rates are not the only mechanism for repairing cost imbalances—a fact that Krugman does not seem to get.

More in Forbes

Links to Shaun Rein’s upcoming book in Storify

Shaun Rein is a speaker in the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.