Posted on February 22, 2013 at 6:02 PM
Even if China becomes too expensive, the eager Asian markets that surround them are primed for foreign investors. Most notably are India and Cambodia; both of which have a massive source of cheap labor and governments that will eventually become organized enough to support mass manufacturing economies. According to the Washington Post "the inflow of investment picked up sharply last year, as Chinese companies based in Hong Kong and Japanese companies sought out cheaper labor. Peter Brimble, senior country economist for the Asian Development Bank, estimates that overall foreign direct investment in Cambodia will jump to $1.5 billion in 2012, up from $850 million in 2011, because of investment in manufacturing, agriculture and the financial sector”. Thus, outsourcing and business in the Far East is still very much alive and the U.S. shows no visible signs of reducing its imports.
Not only are Asian markets more labor efficient than their Western consorts but their economies are also thriving as seen by the strength of their currencies. While the U.S. government has ongoing resistance to government spending cuts, a lack of job growth and the eventual restrain of the dollar, the Chinese yuan, Singapore dollar and South Korean won show no signs of faltering.
According to MoneyMorning the top currencies in the Far East will likely be the Singapore dollar (SGD) and the South Korean won (KRW). Singapore serves as a major trade gateway to China and "the constant flow of foreign currencies through the banking system provides both revenue and a risk-reducing value base". Since trade between Singapore and the rest of the world is linked through China, as China's economy turns higher so will Singapore's. In addition, South Korea's currency benefits from a strong internal economy and high export demand for its cultural products in the West, as well as its close association to broth China and Taiwan.
Even though skepticism surrounds China's ability to keep labor costs down and exports up, the economy and the economies of their neighbors show no sign of slowing down. China is like the Johnny Appleseed of global economics; as it travels around the world with its strong currency and unprecedented growth, it plants seeds in countries like Singapore, South Korea, Cambodia and India to mirror it's cheap labor and quick production which in turn boosts their economies. Thus, with it's prime market and thirsty business folk the Asian economy looks like it's going to keep growing-- apple trees and all.
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