Rising costs threaten China's export advantage.

The combination of cheap labor and low-cost ocean freight, which has fueled the boom in China's exports to the U.S., may be coming to an end, according to two supply-chain experts. China's labor advantage will come to an end by 2010 as its costs continue to rise at an annual rate of 20 percent, said Jon Monroe, founder and president of Jon Monroe Consulting in Sausalito, Calif.

Labor shortages are starting to develop, especially in the Pearl River Delta around Hong Kong where so much of the country's manufacturing sector is located, as migrants from the rural west opt for better labor conditions in the Yangtze River Delta or to stay on their own farms, Monroe told the …