The end of "chinese cheap labour" is only one factor fueling the possible redeployment of manufacturing. Ever increasing transportation costs and transit times from the far east means that really progressive companies should be looking past Vietnam to the low wage\high unemployment states in the US south and east. I posit that it will be only a short while before we hear the US multi-nationals trumpeting the return of plants to the US mainland.

That may work for the low end products where transportation is a big part of the cost, but what about high value goods? That's where the serious money is made. Are there enough engineering and science grads in the US to rebuild that part of the economy, or will they have to import them from China and India?

Clearly, China is following the same strategy as post-war Japan. Capture the low end of the market through cheap labor, then use that advantage to gradually improve your output through education, foreign investment and technology transfer. The main difference is, that whereas Japan has an aging population, China has a young and growing one. The potential for developing China's internal market is definitely there - the main obstacle seems to be political rather than economic, i.e., too much economic freedom leads to demands for political reform, a scenario which must keep the politburo up nights.

ebear