Further growth in China has become a source of concern for Asia’s manufacturing companies hoping to take advantage of China’s cheaper labour force, according to Gartmore's head of global emerging markets Chris Palmer.

He says that in the Guangdong province of China, the minimum wage has already been raised by a record amount and Chinese manufacturing companies are facing larger wage bills. As a result, manufacturing companies are relocating from the relatively wealthy coastal regions to lower cost regions in the interior of China.

He also says companies are cautious about the second half of 2010 given the diminishing impact of Chinese and American government stimulus packages and a fear of increasing regional interest rates. From Asia’s perspective, there is an uncertain outlook for the European Union given the issues surrounding Greece and low growth prospects negatively impacting the region’s exports to Europe.

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