Well, at low cost compared to western labour, but at high cost compared to recent Chinese past.
(We would need to introduce some actual numbers in the discussion to say anything more precise.)
> They are capturing more of the profits because of this.
Just to clarify: things are still becoming cheaper for consumers around the world.
Overall the pie has grown. China might be getting relatively more of the pie, but the rest of the world also got more in absolute terms.
> 3. And at the same time, countries with even cheaper labour are competing with Chinese producers on the low end. You see this particularly with things like clothes and shoes which are labour intensive but relatively low tech.
Yes. But yet, Chinese wages are going up.
Of course, there has been some government intervention on all sides, but companies are also willing to pay a bit of a premium to secure a second supplier.
That's because of several factors -
1. China has a massive massive population and the majority is still relatively poor. This is still lots of untapped labour available at low cost.
2. The skilled workers that have been trained in the past 3 decades is allowing China to move up in the value chain. They are capturing more of the profits because of this. Look at how many Chinese tech brands establishing significant presence in western markets. They are able to offer lower prices as they are mostly vertically integrated and labour costs of even the skilled positions are generally lower in China (where they centralise a lot of their functions) compared to the west.
3. And at the same time, countries with even cheaper labour are competing with Chinese producers on the low end. You see this particularly with things like clothes and shoes which are labour intensive but relatively low tech.