CHINA'S soaring wages and strengthening currency might blunt the competitive edge of exporters that have seen average pay double since 2007, but it won't stop firms worldwide making a collective US$100 billion bet on setting up shop here this year.
Although foreign direct investment inflows in 2012 have seen the longest monthly run of year-on-year declines since 2009, hurt by a weak outlook for corporate investment and sagging global trade, FDI should still top US$100 billion for the third year running.
That would bring China's total since 2007 to about US$625 billion, based on data from United Nations agency, UNCTAD, during which time a rally in the yuan currency has sliced 25 percent from exporters' margins.
Vietnam, Bangladesh, Indonesia and Thailand combined managed to snag only US$141.6 billion in FDI between them from 2007 to 2011, despite being repeatedly touted as the places to which manufacturers fleeing China flock.
Value-added production
What keeps the money coming to China is a steady shift away from cheap assembly lines to high value-added production and from volatile external demand to the spending power of a new mainstream consumer class that analysts at McKinsey reckon will rise 10-fold between 2010 and 2020.
Indeed the decline of low-end manufacturing fits with China's ambition to drive firms up the global value chain to help sustain the wage rises vital to attaining developed economy status and avoiding a "middle income trap" of low wages and stagnating growth.
Bullet train attendants receive trainings in China's Shenyang
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