By Ziyang Yin and Nick Marro

Minimum wages in China’s major cities rose in 2016, signaling the continued development of an emerging consumer class as much as increasing pressure on company labor costs. But the increases also point to an increasing divide, as wage growth stagnates in the majority of China’s provinces.

The US-China Business Council (USCBC) compiled data on minimum wage increases across China into several charts and graphs to help companies understand the labor situation of their local operations.  

Who qualifies for minimum wage?

Local governments were previously required by Ministry of Human Resources and Social Services (MOHRSS) to adjust the minimum wage level every two years for full time employees (20.83 days per month, as stipulated by the Labor Law) and contract employees who work a set schedule. Minimum wage levels are normally determined by local factors, such as the cost of living, average wages in the province, housing funds, and medical and social insurance.

In May 2016, MOHRSS granted provinces more flexibility by requiring authorities to adjust minimum wages every two to three years.

Where are costs rising?

All four major municipalities (Beijing, Shanghai, Tianjin, and Chongqing) and five provinces (Liaoning, Jiangsu, Hainan, Shandong, and Hebei) saw gains in monthly wages in 2016 an average of 10.7 percent, a slower rate than previous years, which can be attributed to slower economic growth. Shanghai remains the city with the highest minimum wage, with workers entitled to RMB 2190 per month. Shenzhen (RMB 2030), Guangzhou (RMB 1895), and Beijing (RMB 1890) round out the top four. Because MOHRSS only requires adjustments once every two to three years, many provinces did not change the monthly minimum wage this year.

 

China Minimum Wage by Region (RMB)
Region 2016 Monthly Minimum Wages 2015 Monthly Minimum Wages 2014 Monthly Minimum Wages
Shanghai 2190 2020 1820
Tianjin 1950 1850 1680
Beijing 1890 1720 1560
Jiangsu 1770 1630 1480
Shandong 1710 1600 1500
Hebei 1650 1480 1320
Liaoning 1530 1300 1300
Chongqing 1500 1250 1250
Hainan 1430 1270 1120
Shenzhen 2030 (Unchanged) 2030 1808
Guangzhou (Tier 1) 1895 (Unchanged) 1895 1550
Guangdong 1895 (Unchanged) 1895 1550
Zhejiang 1860 (Unchanged) 1860 1470
Xinjiang 1670 (Unchanged) 1670 1520
Inner Mongolia 1640 (Unchanged) 1640 1350
Shanxi 1620 (Unchanged) 1620 1290
Henan 1600 (Unchanged) 1600 1400
Guizhou 1600 (Unchanged) 1600 1030
Yunnan 1570 (Unchanged) 1570 1420
Jiangxi 1530 (Unchanged) 1530 1230
Anhui 1520 (Unchanged) 1520 1260
Fujian 1500 (Unchanged) 1500 1320
Sichuan 1500 (Unchanged) 1500 1200
Shaanxi 1480 (Unchanged) 1480 1280
Jilin 1480 (Unchanged) 1480 1320
Ningxia 1480 (Unchanged) 1480 1300
Heilongjiang 1480 (Unchanged) 1480 1160
Gansu 1470 (Unchanged) 1470 1200
Tibet 1400 (Unchanged) 1400 1200
Guangxi 1400 (Unchanged) 1400 1200
Hunan 1390 (Unchanged) 1390 1265
Qinghai 1270 (Unchanged) 1270 (Unchanged) 1270

 

How do the four Tier 1 cities compare?

Figure 1: Monthly minimum wage comparison between China’s four Tier 1 cities from 2014 to 2016.

How fast have minimum wages increased?

Figure 2: Comparison of monthly minimum wages in China’s four major municipalities from 2014-2016.

Wage growth continues to be strong; in Shanghai it jumped nearly 17 percent between 2014 and 2016. Wages in Chongqing grew 16 percent during this period, but the absolute wage level remains lower in that city than in the other municipalities.  

How do eastern, western, and central China compare?

Figure 3: Comparison between geographic regions’ monthly minimum wages growth from 2014-2016 (excluding four major municipalities).

Minimum wages have drastically increased—by 15 and nearly 16 percent—from 2014 to 2015 for China’s eastern, central, and western regions; however, the absolute minimum wages remain comparatively low.

Eastern China leads minimum wage growth in terms of absolute value, due to its position as a more developed part of the country.

Wage growth largely stagnated in central and western China between 2015 and 2016, with those provinces taking advantage of MOHRSS provisions allowing them to adjust minimum wages only once every two to three years. These figures stand in contrast to local GDP figures, which paints growth in these regions as largely stable.  

About the authors: Ziyang Yin and Nick Marro provide business advisory services for members of the US-China Business Council. USCBC is a private, nonpartisan, nonprofit organization of more than 200 American companies that do business with China. Founded in 1973, USCBC has provided unmatched information, advisory, advocacy, and program services to its membership for more than four decades. Through its offices in Washington, DC, Beijing, and Shanghai, USCBC is uniquely positioned to serve its members’ interests in the United States and China.

Posted by Ziyang Yin and Nick Marro