Factories that had thrived by using cheap migrant labor to churn out inexpensive clothing, electronics and toys for export now face changing government priorities as a growth engine based on investment and trade loses its momentum after more than a decade of double-digit expansion. [...] China's labor costs are rising and global demand is still weak, putting pressure on manufacturers to move into more advanced production, consolidate into bigger entities or shift to cheaper inland regions to survive. Premier Li Keqiang has already ruled out sweeping stimulus like the one following the 2008-09 global financial crisis, but Beijing has rolled out some small-scale measures. The latest, announced Wednesday, lowers the level of reserves that rural banks and other financial institutions need to hold and extends some tax breaks for small businesses. The government said it's helpful "but we have 100 reasons to doubt that," said Patrick Chan, marketing manager of iNotten, which is based in Shenzhen, next door to Hong Kong, and makes charging cables and battery packs for smartphones. Chan said low-end manufacturing companies like his that blanket the Pearl River Delta region in Guangdong province face pressure not just from rising wages and costs but also from the local government, which is trying to "push away" the factories and instead attract more advanced companies and service industries, part of the broader effort to reshape the economy.
China Factories Face New Challenge As Growth Slows
By KELVIN CHAN, AP Business Writer, San Antonio Express-News: World
Thu, 04/17/2014 - 1:30am
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