... snip
That and several other factors. The Chinese are artificially keeping the exchange rate of the Yuan (think that's how it's spelled) fixed relative to the dollar at a value advantageous to them. That kind of artificial control only works for a certain amount of time before the control can no longer be maintained. Since the Chinese government is a totalitarian entitity, the idea that artificial controls won't work is foreign to them and will most likely cause them problems further down the road. The other factor is the labor rate, if you can get a Chinese worker to work a whole day for less than what a first-world worker gets for one hour's worth of work, and if you have relatively the same level of productivity, you can make up a lot of shipping costs. That's even more true if the Chinese worker receives no benefits (apparently some of the more rural areas of China no longer receive government-sponsored health care). It does seem difficult to believe that one can make up two-way shipping (raw material over + finished product back) with just labor savings alone however.
+--------------------------------------------------------------------------------+ If you're gonna be dumb, you better be tough +--------------------------------------------------------------------------------+