The People's Bank of China announced a plan to increase the flexibility of the yuan exchange rate, loosening from its peg to the U.S. dollar. The yuan has already increased in value to 6.78841 for US$1 late Tuesday, from 6.81963 Friday, before the announcement. That's an increase in value of nearly half a percent against the dollar, and Credit Suisse estimates it will rise as much as 4 percent over the next 12 months.
Labor costs in China have also been an issue for the global electronics industry this year, said Helen Chiang, an analyst for market researcher IDC in Taipei. Better paying jobs throughout China have lured workers away from the electronics manufacturing industry and forced companies to pay more to retain employees.
A string of suicides at factories owned by Hon Hai Precision Industry, which operates under the Foxconn trade name, led to a pay increase for its workers as well. Hon Hai is the world's largest electronics contract manufacturer with a customer list that includes Apple, Dell, Sony and Nintendo. The company employs nearly one million people, mainly in China.
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