Caught in a Chinese pricing pincer

Beijing and Shenzhen's decision to boost wages will intensify pressure on China's exports industry, part of which is already uncompetitive due to the higher yuan.

Chinese exporters, already battling a slump in demand and an intense squeeze on profit margins, will come under even more pressure following the decision of two of China’s largest cities to raise their minimum wage rates.

The decisions by Beijing and Shenzhen are likely to prompt other local governments to follow suit in raising minimum wages. But this year’s increase in minimum wage rates is well below the 20 per cent annual increases seen in the past two years.

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