A pinch of rising labor costs has been felt by Chinese factories, but China's labor minister said on Tuesday it is good for the nation's strategic economic restructuring.

China faces a dilemma that underpaid factory workers demand higher wages while many small-sized export-oriented factories could not afford the rising costs of labor and raw materials, Yin Weimin, minister of human resources and social security, told a press conference.

"Rising labor costs, however, could push for the transformation of the economic development pattern," he said.

The wage increase could be realized through more consultations between employers and employees, he noted.

After decades of economic boom on the back of cheap labor and intensive energy use, China wants to make the economy more technology-depended and vowed to make more ordinary people share the benefits of the growth.

In the 12th Five-Year Plan period (2011-2015), China aims to increase the disposable income of urban and rural residents by at least seven percent a year, the same rate as the GDP growth target.

The minimum wage should increase by at least 13 percent a year over the next five years.