the article talks about the posibility of outsourcing factory work out of China, but I wonder if the chinese government will allow that. They have been pretty ruthless when it comes to defending their own economy

I didn't take it as mostly PRC firms outsourcing (some) of their work, but more of foreign firms moving their lower in the value chain work to less expensive countries (and as the same time the PRC continues to move up the value chain).

Haven't we seen some (or a lot?) of that in clothing manufacturing? The PRC government doesn't have too much leverage over that, e.g. we're talking small companies (at least compared to Apple, Dell, etc.).

But you do have a point about their ruthlessness, and it might come back to bite them. Their policies, especially in exchange rates, have a tendency to beggar their neighbors. In the long run that's unlikely to be a good thing.

I was thinking that if say Dell tried to move part of their production to a cheaper country (e.g Vietnam), they might meet some resistance from the PRC, in the form of threats, sanctions or whatnot. From what I've read, they value their manufacturing power very highly, and won't be open to the outsourcing thing, unlike the US.

Yeah, that's a possibility. But it would be a dangerous gambit, e.g. Dell could then move all its manufacturing out (Foxconn, their prime subcontractor (or so I gather) is making threats to that effect anyways right now as far as we can tell) and it would certainly deter a lot of future business from all companies.