(Beijing) – The government of Guangdong Province says it will leave the minimum salary for workers in the major manufacturing hub in southern China unchanged this year and next in a bid to help their employers rein in costs.

The provincial government made the announcement in an action plan published on February 29. The government explained that it wants to encourage "supply-side reform" by helping manufacturers cut costs, improve quality controls and innovate.

The central government started using the phrase supply-side reform in recent months, arguing that it will make the economy more efficient and spur growth. Communist Party boss Xi Jinping used the term at a meeting held to discuss economic matters in November, marking the first time top leaders used what has become something of a catchphrase.

There are signs manufacturing activity is slowing in China. The Caixin China Purchasing Managers' Index for the sector of the economy dipped to 48 in February, two points below the 50 mark that separates expansion from contraction. The figure for February was 0.4 points lower than in January.

Guangdong's government said keeping salaries the same is necessary because incomes should reflect a region's productivity and the overall economic outlook. Minimum salaries vary within provinces. The official minimum in Guangzhou, Guangdong's capital, is 1,895 yuan, while the figure in smaller towns is 1,210.

China's economists often use the minimum wage as a barometer for regional economy and a benchmark for employers. Many small businesses use minimum salaries set by the government as the base level for their workers.

Labor costs have been rising in recent years – often faster than the government can raise the minimum – prompting some experts to worry that Guangdong could lose its edge in manufacturing to other regions of China and to countries such as Vietnam and Bangladesh.

The minimum salary level affects factory workers because their office counterparts and government employees usually earn much more. Regional governments announce new minimum salaries every May.

Shenzhen, home to a special economic zone in Guangdong that is allowed to set its own minimum salary, is not subject to the freeze. Guangdong had the third highest minimum salary after Shenzhen and Shanghai at the end of 2015.

The province's economy officially grew by 8 percent last year, higher than the 6.9 percent growth for the nation. But expansion was slower in Guangdong than in years past. In 2010, the figure stood at 12.2 percent.

GDP growth in the secondary sector, another term for manufacturing, expanded by 6.8 percent in 2015 compared to 14.5 percent in 2010, official data show.

The freeze is the third in Guangdong since the central government started setting the minimum level in 2004. The province did not raise the level in 2008 and 2012.

(Rewritten by Li Rongde)