You know that China is losing its edge as the obvious destination for low-cost manufacturing when its largest employer in the private sector decides to replace men with robots on assembly lines.
Taiwanese electronics manufacturer Foxconn, which is a big assembler of gizmos such as the iPad, said this week that it will put 300,000 robots to work by next year. The company has been a lightning rod for criticism about low wages and poor work conditions in China.
China’s working age population is expected to peak in 2014. Beijing is also trying to make the transition to a consumer economy based on higher wages. These two macro changes undercut the base of China’s splendid emergence out of the chaos of Maoism.
Rising Chinese wages should be an opportunity for Indian manufacturing activity, but that will require tax reform, better infrastructure and a more flexible labour market.