Along the Pearl River Delta manufacturing belt, abandoned factories and “for lease” signs bear testimony to rising labor costs as companies seek cheaper workers in places like Thailand and Vietnam.

Fearing more job losses, Beijing has urged local authorities to be “steady and cautious” about approving wage increases. Guangdong province responded with a two-year freeze on minimum wage increases in February.

Yet at the same time, authorities are more strictly enforcing manufacturers’ payment of workers’ pension and other social-security benefits, highlighting the delicate balancing act that China’s central and local governments face as they seek to ease business costs while trying to avoid further social unrest that could undermine the Communist Party.

“Such dilemmas and contradictions will be a major feature in labor policy-making in the coming years,” said Wang Kan, a professor at the China Institute of Industrial Relations in Beijing.

In Guangdong alone, factory workers staged 173 strikes over issues including unpaid wages and social-insurance benefits in the first six months of 2016, according to Hong Kong-based advocacy group China Labour Bulletin.

Chan Kei Biu, who runs a factory in the Guangdong manufacturing hub of Dongguan, believes that Chinese wages and benefits are still too high compared with Thailand and elsewhere in Asia. While he remains committed to China, he has streamlined his operations by closing four of his five factories in the country and slashing his workforce by 85% since 2008.

He said he is “only a little bit relieved” by Beijing’s drive to suppress wage increases. He already pays above the minimum of 1,895 yuan a month (about $284), and for the first time since the 2008-2009 financial crisis, hasn’t raised wages because it has been easier to find workers as factories shutter.

Factories used to “negotiate with the government and we’d only have to pay part of the social insurance contributions,” said Mr. Chan, who makes a variety of electrical products used in navigation and air conditioning systems. “Now, Dongguan has said you have to pay 100%.”

Dongguan officials did not respond to requests for comment.

Local authorities across the country are trying different ways to balance competing demands.

In March, Shanghai unveiled its slowest minimum-wage increase since the global financial crisis. Meanwhile, the southwestern megacity of Chongqing and the northeastern rust-belt province of Liaoning are raising minimum wages by up to 20% this year after holding them steady in previous years.

In both areas, strikes by factory workers over wages, benefits or working conditions are up this year, according to China Labour Bulletin.

Some economists point out that rising wages can help stimulate the economy by giving workers more spending power. And higher social-security contributions, in theory, will benefit migrant factory workers who otherwise must rely on paltry savings to meet health-care costs and mitigate unemployment risks.

Jiang Yufeng, a 26-year-old worker at a computer-parts factory in Dongguan run by Hong Kong-based PINE Technology Holdings Ltd. , said he welcomed higher social-security contributions, but also expressed concern that rising labor costs may eventually hurt his job prospects.

“Industrial upgrading always comes with a spell of pain,” said Mr. Jiang, who previously dug tunnels as a construction worker back in his home province of Sichuan before moving to Dongguan about five years ago. “One worry is that labor-intensive industries would be phased out and result in large-scale job losses.”

In recent months, other cities in Guangdong including Shenzhen and Guangzhou have joined their counterparts elsewhere across the country in offering “job stabilization” subsidies to help companies slash labor costs and avoid layoffs. The program provides companies with refunds from government unemployment-insurance funds that can be used to retain or retrain employees.

Another way to cope with high labor costs is to change the business model. Sonny Chan used to make cheap T-shirts and sweaters. Today, he makes clothing for luxury brands such as Armani, St. John’s and Prada, which carries better profit margins.

He said 70% of the factories around him have closed or downsized.

“It’s not possible to open another factory in Dongguan,” said Mr. Chan, noting that wages at his Dongguan and Shanghai factories have risen on average 10% to 15% annually over the past 20 years. “Business as a whole world-wide is going downhill so our strategy is to stay lean.”