Increases in unit labour costs are "not passed through fully" to the final prices of Chinese goods, according to a discussion paper published by the Bank of Finland Institute for Economies in Transition, but this could change with the "recent sizeable growth" in nominal wages.

In Wage and price dynamics in a large emerging economy: The case of China, Carsten Holz and Aaron Mehrotra attribute the lack of transmission to the "strong pressure" on profit margins as a result of the highly competitive