China's factories have made their rivals in developing countries and Western countries to feel ashamed because even under the circumstances that there is almost no increase of global demand, they still enjoy large shares in the market. New achievements that China has made rely heavily on the U.S. market. In May China's export to the U.S. has increased by 23%, while export to the EU has increased by only 3.2%.
Factors helping to support China's export success consist of a long-term investment in automation and short-term devaluation of the Yuan. As China has become richer and more affluent, manufacturers in various parts of the country have strived to make the investment in introducing labor-saving equipment, reorganizing the production workshop and through other measures to control labor costs. For example, in the South China a home sauna manufacturer installed a CNC drilling machine which can replace eight workers.
In May, the Chinese government allowed nearly 1 percent of devaluation of the Yuan to the dollar; therefore,Chinese goods become cheaper in foreign markets. Important changes in inflation, then helps to strengthen the China's export competitiveness. In addition, the Chinese government has also urged the state-owned banks to provide more loans to those small and medium-sized manufacturing enterprises which have been producing goods for exports.
Currently the biggest question is to which extent the investment in automation and improvement of the working efficiency can offset the rise of China's manufacturing labor costs.
Roger Lee, an executive in a Hong Kong garment company said that the labor costs have been increasing at the rates of more than 15 percent a year, but the increase in productivity per worker is only half of the increase of the wage.
Many mainland and Hong Kong enterprises have set up factories in Southeast Asia where wages are lower than that in China. However, other Chinese-funded enterprises, through the contrast, found it difficult to adapt infrastructure and bureaucracy in Southeast Asia, so they remain inside the country.
Actually with the use of CNC drilling machines and other equipment, China is still a competitive export base, and the United States will also continue to import Chinese goods.