But policy planners are likely to stop the process of rate hikes before too long, unless it wants to expose the Chinese banking sector to the myriad risks presented by a sharp economic slowdown. These are the least-skilled jobs, and the goods made have a very large labor component, so this segment of theeconomy really competes with places like Mexico, the Caribbean, Central America and Southeast Asia. The reasons for risinginflation are pretty straightforward and can be explained by the notion of "capacity utilization."