China’s economic boom may be taking a short break in Guangdong Province where least 20,000 Hong Kong-owned factories could be shut down this year on account of increasing fuel prices, employee wages and the country’s appreciating currency.
Following record high crude-oil prices, the government has put gas and
diesel prices up, a second time within the year, by 17 per cent. And in
addition to fuel costs factory owners are contending with increased
employee expenses attributable to the new labour contract law which
mandates minimum wage and severance pay.
But these however are not the
only issues companies are battling with. The Chinese yuan has seen a 4
per cent gain against the U.S dollar making the demand for Chinese-made
products less attractive and it is said that Chinese exports are on a
sharp decline.
Media reports quote Sun Mingchun, an Economist with Lehman Brothers
Holdings Inc in Hong Kong as saying “The volume of goods and services
sold overseas has declined to "single-digit" growth”
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