China has a wages problem. I know… it sounds odd because for the past decade Americans have watched companies flock to China simply for the cheap labor they’ve offered.

But this trend is coming to an end.

Since 2007, Chinese wages have increased about 12% per year. Take a look… (the bluish green, vertical bars show the average yearly wage in China):

See larger image

That’s a pretty steep increase – and it has companies looking elsewhere for the next source of ultra-cheap labor. Clothing makers are looking more and more to places like Vietnam and Bangladesh as the “new,” cheaper China.

As a result, China has lost 6% a year of foreign investment into this industry. That hurts!

And it’s not just China’s clothing market that’s hurting. Foreign investment into China’s total manufacturing sector is waning.

In 2001, 66-cents of every dollar that went into China were targeted at manufacturing. A decade later that figure dropped to 47-cents on the dollar.

Most of the money foreign investors once funneled into China’s cheap manufacturing sector is now flowing into… you guessed it, real estate!

This just compounds the problem Harry talked about! Markets become quickly perverted thanks to central-planned, top-down economics. China is inflating a massive real estate bubble that is destined to pop.

Buyer beware!

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Adam O'Dell
Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.