While China is currently the most competitive manufacturing nation on the globe, a new study released on Wednesday predicts that the United States will surpass it by the end of the decade, as a global shift to more advanced methods of assembly favors advanced economies.

Jian Yang, Director of Finance at the University of Colorado Denver Business School said the traditional Chinese advantage in manufacturing – cost competitiveness – has been compromised due to rising wages and soaring land prices.

“This obviously contributes to the decline in manufacturing competitiveness. There is also room for China to further improve its productivity, particularly for some State-owned enterprises,” he said.

Yang believes that China’s recent shift in economic priorities will not hinder the nation’s manufacturing competitiveness.

“The shift in China’s economic policy to encourage more domestic consumption does not hurt but actually may help increase its manufacturing competitiveness as a larger domestic market may better ensure Chinese firms reap the benefit of the economy of scale and the associated lower unit cost of manufactured goods,” he said.

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