THEORY: Stop trying to make reshoring happen

by Lindsey

Tim Leunig, an economic historian at LSE, argues in the Financial Times that reshoring from China is not going to happen, despite how much people wish it would.

I’d recommend reading the short piece, but if you really can’t make the effort, here’s a summary: low-cost Chinese labor will be elastic for a while yet, but even when China does run out of low-cost workers, producers will make for the subcontinent and Africa. And although relatively higher-wage jobs (think $5 per hour instead of $2, coastal) with electronics producers in China will still mean fairly reliable workers and low per-unit production costs, any reshoring of those jobs to the US will not be a 1:1 reshoring. Chinese productivity is still much lower than US productivity, meaning for every 8-12 jobs China loses to us, we would only gain one. Bummer!