Interesting challenge for China

Well, this was bound to happen. As other countries develop, virgin territories will be available for business, many of which will be cheaper, less repressive, and more accomodating than China. China will be in the interesting position of trying to figure out what they want to be in the near future. Recently, they've been the kings of manufacturing because they could do it at a lower cost than the rest of the world.

With developing nations nipping at their heels, what do they do? Go higher tech? Go less repressive to attract more capital and talent, or more correctly, to retain it?