Last year, seven regions, Chongqing, Shaanxi, Shanghai, Beijing, Hebei, Fujian, and Qinghai, rise their minimum monthly and hourly wage.
In past two years, most of regions of mainland China increased their minimum wages. Local government are required to interfere local minimum wages setting according to local consuming ability.
China’s minimum wage: Understanding regional variation
Guadong, Jiangsu, Zhejiang, Beijing, Shanghai, Shenzhen, and Tianjin are the cities that are ranked the highest minimum wages around the counties, around RMB 2,000.
In certain rural areas of Liaoning, Human, and Anhui are the cities that are ranked as the lowest minimum wage around the counties, around RMB 1120.
China has made some progress over past decade to improve the income inequality among the cities.
Impact on China’s labor costs
Minimum wages do not show real story of labor costs in China.
As China’s economy move to more valuable industries, most workers employed earn above the minimum wages. For example, employee’s average salary in Shanghai is RMB 9,723 per month, over four times over the local minimum wages.
One reason causes rapidly rising wages is country’s labor pool shrinking. In 2008, China’s employed population declined for the first time ever, falling by 540,000 for a total of 776 million.
Thus, for foreign investors, rising wages are an unavoidable feature of doing business in China. However, when investors take productivity, infrastructure, transportation costs, and access to a massive domestic market into account, China is still as a more cost-efficient option compared to other counties with low labor costs.
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