Wage pressures are building in China – even outside export-led zones, and in non-exporting industries. Yet any idea that the nation is about to surrender its status as the workshop of the world would be wide of the mark.

Even for labour-intensive industries, labour costs can be a small fraction of the whole. At Foxconn International, which has in effect doubled wages for hundreds of thousands of assembly-line workers, staff costs (including pensions) are about 7 per cent of the cost of inventories. Moreover, many of the biggest producers have ample room to absorb pay rises. Between 1994 and 2008, on Nomura estimates, industrial enterprises showed 21 per cent annual labour productivity growth, while annual wage growth was just over 13 per cent. In other words, unit labour costs fell. Many humble contractors are now much more profitable than their developed-market customers. For example, the five-year average net profit margin at Zhejiang-based clothier Shenzhou International, a big supplier to Uniqlo and Nike, is 15 per cent – double that of Japan's Fast Retailing (Uniqlo's parent) and two-thirds higher than the US sports brand.

Further, higher wage settlements may not necessarily lead to lower margins. Early movers such as Foxconn, where full increases are effective from October 1, may find that at least some of those costs can be passed on to vendors anxious to build inventories ahead of the peak fourth quarter. Even if they are not, there is always the option of shifting production further inland, where wage pressure is not as great, or even subcontracting to Bangladesh. For the biggest, then, the pressure looks containable, especially if it spurs further consolidation around larger production units. Rising wages, meanwhile, achieve real effective currency appreciation, which could serve to spur domestic consumption. The “China price” looks safe for now.