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China's major competitive advantage in recent years has been the fact that it has a very low-cost labor force that is relatively well-educated. China has also had a relatively good infrastructure when compared to other low-wage countries. Because China has had a fairly good business environment (good infrastructure, stable government) and low wages, it has had an advantage over other countries in manufacturing jobs.
Lately, this advantage has been disappearing. China's future advantage may well be the size of its middle class. China has a huge domestic market and laws that make it much easier for local firms to succeed than for foreign firms to succeed. This may well be China's greatest growing advantage as its workers push for higher wages and its old advantage disappears.
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