WSJ: “As rising labor costs push manufacturing of T-shirts, jeans and the like out of China, the country has been able to offset that loss by grabbing the high end.
![[image]](https://i0.wp.com/si.wsj.net/public/resources/images/MK-CB859_CEXPOR_G_20130324184514.jpg)
And nowhere is that on better display than the San Francisco-Oakland Bay Bridge.
When the switch is flipped each night for the span’s two-year artistic light show, the electricity flows through sophisticated power devices made by Gary Hua’s factory not far from Shanghai.
In the six years since it was founded, his company has grown to 1,000 employees, who last year made three million power-supply units for high-efficiency light-emitting diodes. The company, Inventronics Inc., expects to double production this year and export more than half that output.
With labor costs increasing in China, the country is now shifting its manufacturing focus to high-tech exports such as computers and sophisticated power devices. Shaun Rein of China Markets Research tells the WSJ’s Jake Lee how Western countries are reacting.
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Inventronics exemplifies China’s shift toward producing the higher-end products that are fueling the country’s export growth. China has been increasing exports in industries as varied as computers, car parts, high-technology lamps and optical-surgical equipment, according to a Wall Street Journal analysis of Chinese, European Union and U.S. trade data.
HSBC economists estimate that China’s share of global exports increased to 11% last year, from 9% before the 2008 financial crisis and around 5% at the turn of the millennium. China’s exports rose 8% last year while global trade expanded just 1.6%, according to the Netherlands Bureau for Economic Policy Analysis.
Chinese employment in higher-value industries such as electrical- and communications-equipment production has jumped since 2008 and now exceeds employment in textiles, garments and leather making, says Royal Bank of Scotland RBS.LN +0.68% economist Louis Kuijs.
High-tech goods are more valuable and are a bigger market than clothes. Over the past two years, Chinese exports to the U.S. of high-tech electronics, auto parts and optical devices rose 24%, to $129 billion, while exports of clothes and footwear rose just 5% to $47 billion. That has caused China’s share of the U.S. trade deficit to expand $20 billion last year to a record $315 billion, according to a U.S. government analysis.
A chunk of what is marked “Made in China” is made up of parts and design that originated elsewhere, making trade data a little fuzzy. The chips in Inventronics’ LED drivers are from the U.S., for example.
But China’s exports contain a rising percentage of materials that were made in the country, according to the World Trade Organization and the Organization for Economic Cooperation and Development. In 2009, the latest year for which figures are available, 28% of the value of Chinese exports came from foreign producers. In 2005, the figure was 36%.”
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