Could pay raises threaten China's role as the 'world's factory'?

For the past three decades, China has been the world's factory, manufacturing goods consumed around the word. The "Made in China" miracle is built on that fact that China, until recently, has had very cheap labor. However, with the increasing labor unrest, a wave of pay raises have been announced, and although many are celebrating the labor victory, voices online wonder if this is what's best for China in the long term.

Pay raise wave
Zhang Yansheng from the Development and Reform Commission's Economic Research Center tells the International Herald Tribune in an interview that a survey he carried out in the Guangzhou and Shenzhen area shows that GDP has been growing at over 10 percent for years while the cost of labor has hardly climbed at all. "That is obviously not right," says Zhang.
Even there is labor law workers still have to work over 12 hours a shift. The pay raise is the same, not real - Xingcheng Luochuan, Chinese netizen from Jiaxing.
Intrigued by Foxconn's series of suicides, Zhang's group announced that it will offer its workers performance-based pay raises that would increase some workers' wages up to RMB 2,000 per month.
Seeing this shift from two major companies in its region, the Shenzhen government raised its minimum wage to RMB 1,100. Eleven other provinces and cities adjusted standards for minimum wages between 10 and 20 percent, including in Beijing. Not a bad PR move.
Although the news of these raises has been played up in the media, people on the ground are questioning if it's the right direction for China to go in, and more importantly, are people ever actually going to see those wage hikes?
Chinese factories: Do they stay or do they go?
"Such pay raise is unreasonable," says Huang Mingzhi, head of the Taiwan Chamber of Commerce in Shenzhen to QQ.com. "We cannot afford and will not follow. With this trend, most of Taiwanese electronic factories on the mainland will leave within the next three to five years." Foxconn has already announced plans to move thier factories more inland and north.
With rumors about major foreign companies considering moving their factories from China to other countries in Latin America and Asia due to China's increased labor costs, head of China's Investment Commission Zhang Yahan argues that factories will remain in mainland China since wages are only one small part of overall production costs. "It is more possible that factories will be moved from the coast to central or western China," says Zhang. "And that is also what the Chinese government encourages them to do."
The disappearing raise
While the experts debate what effects the pay increase might have on China's status as the world's factory, regular workers are barely seeing any changes to their bank accounts. QQ.com user Hua Qian points out that when newspapers and websites are all talking about the raises, none of the people he knows has actually gotten more money. "How come I never get a raise? It's all not real, it's just words for the newspapers."
"Even though there are labor laws [restricting it], workers still have to work over 12 hours a shift," comments Xingcheng Luochuan from Jiaxing. "The pay raise is the same, not real."
If those wages do in fact make it to people's pockets, inflation across the country becomes a concern for many - factory and white collar workers alike.
Netizens complain that even with an increase in wage, the living cost in China is growing much faster. "National pay raises means the cost of living is getting more expensive too. What RMB 1,000 was worth before now costs RMB 10,000," says netizen Heishan Laoyao.
Netizen Fengqing Yundan from Kunming agrees: "The speed of pay raise can never catch up with the speed of the housing price increase." Chinese real estate prices been one of the biggest issues discussed on and offline.
About the change of China's status as the world's factory, netizen Suiyi Rufeng from Fuzhou says, "Pay raises might threaten China's place as world's factory and even hurt people's pockets, but in the long run we shouldn't want China to always be the world's chimney."