At the same time, the yuan’s appreciation, which the United States and other Western nations say is essential to reduce China’s trade imbalance, makes Chinese products more expensive overseas.

Export prices to increase

Li and Fung, a Hong Kong sourcing company that supplies the U.S. retailer Wal-Mart and other global retail chains, says Chinese export prices will increase as much as 15 percent this year. Company executives last month warned that Chinese goods are entering a new era of rising prices.

The challenges Chinese exporters confront are not new. They have been ramping up over the past two years. In 2008, China implemented a new law that increased factory workers’ salaries. At that time, manufacturers warned that many of them would be forced to close because of rising wages.

Pansy Yau, deputy chief economist of the Hong Kong Trade Development Council, says Chinese exports have stayed strong since then.

“When we look at the share of China export in Europe and the [United] States, we find that the import share from China continues to increase. It proves that China is not only competing on cost because after all these years the wages in China are already higher than some Southeast Asian countries and other low-cost countries,” said Yau.

The Chinese government has been encouraging manufacturers to move factories to poorer inland regions as a way to distribute economic development. Lau says not all industries can do so because they rely on the efficient supply chain in southern China, near other factories making needed components.