Guangdong, China's biggest export centre, announced yesterday it would raise the provincial minimum wage by an average of more than 20 per cent.

The move comes amid worries about inflation in China and complaints from factories in Guangdong and elsewhere about unfilled jobs as they rush to complete a surge in orders since February.

“A lot of our workforce traditionally come from the poorer regions in western China, but factories are moving out there to take advantage of cheaper wages and lower taxes,” said Au Yiu-chee of Hong Kong, who owns a textile factory in Dongguan, a manufacturing centre.

Mr Au said he had only about a third of the workers required to complete an order due in May from a European brand. The People's Daily, the Communist party's flagship newspaper, has reported that factories in the Pearl River Delta have more than 2m unfilled positions.

Guangdong, which abuts Hong Kong, said the wage rise would help attract workers from other areas and improve the lives of low-income earners faced with rising inflation. China's consumer price index rose by 2.7 per cent in February from a year before, the most in 16 months.

Jiangsu province, the region near Shanghai, and one of Guangdong's closest export rivals, last month raised its monthly minimum wage rate by 13 per cent to Rmb960 ($140, €103, £92).

Guangdong's rise, which takes effect on May 1, will bring the minimum wage up to Rmb1,030 in Guangzhou, the provincial capital, to Rmb920 in Dongguan and three other larger cities and to between Rmb660 and Rmb810 in smaller towns.

Mr Au said that the spectre of a renminbi appreciation, which will make Chinese exports more expensive, rendered the wage increase doubly worrying, even if it helped counter the worker shortfall.

Yesterday, the China Council for the Promotion of International Trade said a survey of 1,000 businesses showed exporters in labour-intensive sectors generating profit margins as low as 3 per cent.

Guangdong exported $53.3bn of goods in January and February, 22.1 per cent more than the same period last year.

The province, once dubbed “the workshop of the world” as the preferred location for low-cost manufacturers, now competes with cheaper centres elsewhere in China and Asia.