Economics Explained Did China Just Drop The Ball On Global Dominance?
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Dec 22, 2025 China's waning growth and rising wages are reshaping its role as the world's factory. As a shrinking workforce and a property crisis weigh heavily, alternative manufacturing hubs like India emerge with strong growth forecasts and production incentives attracting major companies. Automation and AI are altering priorities, making stability a new goal over just cheap labor. Meanwhile, geographic competition heats up with Vietnam, Mexico, and Indonesia vying for investment. The discussion raises critical questions about whether India can leverage its advantages to redefine manufacturing and avoid pitfalls like inequality.
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China's Growth Advantage Is Waning
- China's growth has slowed from double digits to around 4–5% and could fall further without reforms.
- This slowdown opens a supply-chain gap as buyers seek alternatives to Chinese manufacturing.
Labor Costs And Demographics Flip The Equation
- Rising wages and an aging workforce have reduced China's low-cost labour edge.
- Factories must automate, pay more, or relocate as the working-age population shrinks.
Property Bust Undermines Domestic Demand
- China's property boom fueled huge domestic demand but now the sector drags on growth after developer defaults.
- The collapse reduced local government revenues and hurt industries tied to construction.