A decision by the province that is China's second biggest exporter to raise minimum wage rates has heightened expectations that other provinces and cities will soon follow, just as the central government's attention is shifting from economic stimulus to rising inflation.
Eastern Jiangsu province, which exports more than Brazil and South Africa combined, raised its monthly minimum wage rate by 13 per cent to Rmb960 ($140) last week. It was the first time the rate had been adjusted in two years.
The potential round of minimum wage increases comes amid signs that inflationary pressures are picking up in the Chinese economy after a rapid recovery in the second half of 2009 fuelled by a massive government stimulus programme. Government officials are debating whether to slow the pace of new loans and begin appreciating the currency to dampen inflationary expectations.