China's cheap labor is reaching a tipping point, writes New York Times' Michelle Dammon Loyalka. Is Obama right to suggest that manufacturing may return to the United States?
When China's vice president, Xi Jinping, visited the White House on Tuesday, President Obama renewed calls for China to play more fairly in the world economy. Vice President Joseph R. Biden Jr. echoed those sentiments, telling Mr. Xi that the two countries could cooperate "only if the game is fair."
But while China's industrial subsidies, trade policies, undervalued currency and lack of enforcement for intellectual property rights all remain sticking points for the United States, there is at least one area in which the playing field seems to be slowly leveling: the cheap labor that has made China's factories nearly unbeatable is not so cheap anymore.
China has experienced sporadic labor shortages, which in turn have driven up its once rock-bottom labor costs. This trend is particularly evident in the weeks following China's Spring Festival, or New Year, when more than 100 million rural migrants return to the countryside to spend the year's biggest holiday with family. Coaxing those same migrants back into the urban work force has proven increasingly difficult.