New research by Tractus, the consultancy, shows that China’s competitiveness as a manufacturing base may not be what it was once thought.
Comparisons between the US and China in terms of electricity costs are pretty stark, with the US being between 34% to 49% cheaper depending on the location.
Industrial Electricity Prices: US vs China
Source: Tractus (2015)
In part this represents downward pressure on electricity prices stemming from the US shale revolution in recent years but also the need for Chinese electricity providers to recoup the huge amounts of investment they have made in infrastructure.
When put together with rising wages in China’s manufacturing sector, such as those previously discussed here, the electricity data point to China’s slowly eroding cost advantage as an industrial and manufacturing hub.