By Weining Hu

China’s labor market changed in 2016. Despite job demand cooling in the beginning of the year, China’s job market has been steadily growing since the second quarter. Average monthly salaries have also increased, particularly in tier-one cities.

Labor demand shifting to new and emerging industries

With more and more white-collar workers searching for jobs online, data from leading Chinese recruitment websites offer an insight into the labor market. In the first quarter of 2016, total online job opportunities on increased by 4 percent year-over-year, climbed to 21 percent in the second quarter, and continued to perk up to 35 percent in the third quarter. The data indicates that more industries and enterprises have restored growth momentum and subsequently stepped up recruitment.

Recruitment growth was mostly driven by new and emerging industries. Internet and ecommerce, insurance, and financial investment were the top-ranking sectors for recruitment demand for the first three quarters of 2016. Additionally, since the second quarter, labor demand in the traffic and transportation sector sharply rose. According to industry analysts, the growth was driven by expanding ecommerce penetration and new government policies allowing public-private partnership (PPP) investments in transportation and infrastructure projects.

On the other hand, traditional manufacturing industries suffered from overcapacity and cut jobs. Minerals and mining; inspection, testing and authentication; printing and packaging; property management; office supplies and equipment; and electricity, power and water conservancy were among the worst-performing sectors in the first three quarters. With structural reform accelerating, the labor market for traditional manufacturing industries will continue to contract, polarizing manufacturing from new and emerging industries.

Increased competition for white-collar workers

In 2016, the majority of job applications were for internet and ecommerce; computer software; real estate and construction; building materials engineering; and financial investment. But, new and emerging industries like these still reported difficulty finding applicants with the necessary skills. In fact, China’s labor market suffers a shortage of highly skilled talents. Skills Shortages in the Chinese Labor Market, a joint study commissioned by J.P Morgan, Fudan University, and Tsinghua University, found that skilled workers account for only about 19 percent of China’s workforce, whereas highly skilled workers make up a mere 5 percent.

Average salaries rising across cities

Labor costs in China continue to rise, with changes taking place not only in the traditional manufacturing industries, but also high-skill sectors. Based on data for 34 key cities compiled by, the average monthly salary rose to RMB 7,606 by the end of 2016. Beijing had the highest average monthly salary at RMB 9,835, followed by Shanghai (RMB 9,720), Shenzhen (RMB 8,640), and Guangzhou (RMB 7,853). High-skill occupations, such as senior management, IT management and project coordination, financial investment services, software and internet development, and legal compliance, offered the highest monthly salaries.

Key takeaways

As China’s economic restructuring continues, labor intensive manufacturing industries are under economic pressure to decrease hiring, whereas new and emerging industries have greater job demand than ever before. Although there are more highly educated university and vocational graduates joining the labor force, the quality of the workforce still does not meet the requirements of these jobs. Consequently, the skill mismatch in China’s labor force is likely to dampen the growth of these industries.


About the author: This article first appeared in China Briefing by Dezan Shira & Associates, a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory, and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit

Posted by Weining Hu