The American Chamber of Commerce in Shanghai says that rising prices for doing business in China may be driving companies to move business to India and Vietnam.

According to the AP "a new labor law, due to take effect next year, has increased uncertainties over hiring and firing practices." The news service adds some companies worry that the law might restore the "iron rice bowl" of lifetime employment practiced by China’s state sector during the era of central planning that followed the 1949 communist revolution.

No one should be surprised by the trend. Manufacturing activities moved into Japan and Korea and as labor prices rose in those companies they migrated to China and Taiwan. The rotation may be hitting its next cycle.

Douglas A. McIntyre