The Chinese central bank’s announcement that it would stop pegging the renminbi to the US dollar engendered a strong sense of déjà vu for manufact- urers based in China.

The last time the People’s Bank of China depegged the renminbi – in 2005 – it set the stage for a gradual, 20 per cent appreciation against the dollar over a three-year period. The currency readjustment coincided with a period of rising wages and raw material costs, giving factory chiefs additional incentives to think about relocating at least some of their operations to cheaper locales in south-east Asia.

Donald Hay, whose family company makes household cleaning and electronics products in southern Guangdong province, considered his options and ultimately decided to stay put. China’s core advantages – labour productivity and infrastructure – outweighed short-term cost considerations.