I was chatting with Zuisetsu Su -- an executive at Japanese automation equipment maker Harmo Co. Ltd.'s Shanghai branch office on the last day of Chinaplas. We first talked about the market's reaction to China's labor cost hikes; then he went on with a thought-provoking personal projection of China's future.

"Labor shortages will end in a few years," he said. I disagreed, pointing out that wages continue to rise with strong legislative backup from the government; many middle-aged migrant workers are returning for good to their hometowns; and young people in the inland regions are not as enthusiastic about the lifestyle of a migrant worker.

That's exactly where the problems are, Su said. He was referring to the geographical imbalance of China's economy, with its clusters of manufacturing around a small number of large cities and ports.

By 2010, manufacturing will be more spread out across China, narrowing the gaps between regions, Su said. He believes the current manufacturing hotspots will see factories shift to areas with sufficient and affordable labor resources.

"What do you think is sustaining the extremely high real housing prices in Shanghai, Beijing and Shenzhen?" Condominiums in midtown Shanghai sell for at least 20,000 yuan per square meter (about US$265 per square foot).

It's the supply-demand relation of clustered population and limited space. Just like what happened in Tokyo in the 1990s, Su said, Shanghai and Beijing will also see their real estate bubbles burst soon. "That will bring down prices all over the board."

A Beijing native, Su moved to Tokyo as a teenager and lived there for 14 years before relocating to Shanghai.