What are the challenges of China’s rising manufacturing costs for companies?

In China’s rush to wean itself from an export-driven economy and into a consumer-based economy, it is State policy to place more money in the hands of Chinese nationals. This means that China has a specific agenda of raising workers’ salary levels on annual basis. Annual increases in Chinese worker salaries and the increases of mandatory welfare costs associated with this are making some local governments in China to strike a fine balancing act between making companies happy (with no further raises to labor cost) and working demanding higher salaries – which will attract more workers and increase local consumption.