Dali Yang, professor of political science at the University of Chicago, effectively melds both of these issues in an excellent article (subscription required) in the latest Far Eastern Economic Review:

     . . . Helped by a booming economy, recovering agricultural prices and lower agricultural taxes, the supply of migrant labor from rural areas is tighter than it has ever been in the reform era. Take the Pearl River Delta region in Guangdong province, a bellwether because of its huge migrant labor population. According to an estimate by the Guangdong provincial government, the number of migrants in Guangdong reached 21.3 million in February 2004. One out of every three jobs in Guangdong is held by someone whose household registration is elsewhere, mostly migrants from the countryside in China's interior. Yet in 2004, the region's factories, especially the assembly lines that demand long work hours and offer the lowest pay, experienced difficulties recruiting migrant workers.
     This came as a surprise to the many observers who considered China's labor supply inexhaustible, particularly since the Ministry of Labor and Social Security still reports a surplus of labor nationally. But assuming relatively stable economic growth, demographic trends predict that the supply of entry-level. low-skilled industrial workers will now start to shrink. As the number of new 15-year-olds steadily declines over the next 15 years or so, this will translate into more bargaining power for those entering into the labor force in the future. It also means that those who lose their jobs in middle age and beyond will stand a better chance of finding new employment. . .
     . . . some employers in the Pearl River Delta have already started to offer more attractive benefits--including better pay and improved living conditions--in order to retain and attract workers. The increase in migrant-labor wages is beginning to make up for the stagnation of recent years. Most interestingly, those cities such as Shanghai and Tianjin that have adopted measures to improve educational access for the children of migrant workers in addition to better work and pay conditions have not suffered from the shortage of migrant labor. Some of the major employers in Guangdong already offer a substantial pay premium plus health care and social security benefits. . . . 

Demographic trends are largely inexorable, although they may be shaped on the margin by migration or other factors.  In other words, China's labor shortage is "baked in the cake," and in a few years the focus of the economic fear mongers will have to turn to another country or region of the world.