Doing Business in China

China Salary and Wages

Introduction to minimum wages in China

A minimum wage is the lowest remuneration that employers can legally pay their employees. Gnereally, minimum wage doesn’t include overtime payment, allowance for special working environment, as well as different forms welfare, such as social security contributions.

What are the minimum wages in China in 2021?

It is regarded as an important indicator considering it reveals the minimum labor cost level, serving as a bedrock for wage costs within a region.

As different parts of the country have very different living standards, China does not have a unified minimum wage level for the entire country. Instead, the task of setting minimum wages falls on the shoulders of local governments. Previously, provinces had to adjust their minimum wages at least once every two years. Since 2016, China has started to give provinces more independence and flexibility in determining minimum wages.

Most provinces set different classes of minimum wage levels for different areas depending on the given region’s level of development and cost of living.

For example, a higher minimum wage class for the provincial capital and the most developed cities, and a lower class for smaller cities and rural areas.

Minimum Wages in China 2021

Province/region

Class

City/urban area*

Monthly minimum wage (RMB)

Hourly minimum wage (RMB)

Anhui

A

Hefei

1,520

16

B

Bengbu

Huaibei

Huainan

Xuancheng

1,350

14

C

Anqing

Fuyang

Huangshan

1,250

13

D

Certain county-level cities

1,150

12

Beijing

-

-

2,320

25.3

Chongqing

A

Certain suburban districts and counties

1,800

18

B

Certain suburban districts and counties

1,700

17

Fujian

A

Xiamen

1,800

18.5

B

Fuzhou

Quanzhou

1,720

18

C

Zhangzhou

Ningde

1,570

16.5

D

Sanming

Nanping

1,420

15

Gansu

A

Lanzhou

Jiayuguan

Yumen

Dunhuang

1,620

17

B

Hezuo

1,570

16.5

C

Linxia

1,520

15.9

D

Certain county-level cities

1,470

15.4

Guangdong

A

Guangzhou

2,100

20.3

B

Zhuhai

Foshan

1,720

16.4

C

Dongguan

Zhongshan

1,550

15.3

D

Shantou

Huizhou

Jiangmen

Shaoguan

Heyuan

Meizhou

1,410

14

Guangxi

A

Nanning

Liuzhou

Guilin

Wuzhou

Beihai

Fangchenggang

Qinzhou

1,810

17.5

B

Yulin

Baise

Guigang

1,580

15.3

C

Certain county-level cities

1,430

14

Guizhou

A

Guiyang

Qingzhen

Chishui

1,790

18.6

B

Kaiyang

1,670

17.5

C

Xifeng

Xiuwen

1,570

16.5

Hainan

A

Haikou

Sanya

Yangpu Economic Development Zone

1,430

12.6

B

Qionghai

Danzhou

1,330

11.7

C

Sansha

Wenchang

Other cities

1,280

11.3

Hebei

A

Shijiazhuang

Baoding

Langfang

Tangshan

Qinghuangdao

1,900

19

B

Handan

Xintai

Hengshui

Zhangjiakou

Chengde

1,790

18

C

Shenzhou

Xinle

Yizhou

1,680

17

D

Certain county-level cities

1,580

16

Heilongjiang

A

Harbin (except certain districts)

Daqing

1,860

18

B

Qiqihar

Mudanjiang

Jiamusi

Suihua

1,610

14

C

Heihe

Yichun

Daxinganling

1,450

13

Henan

A

Zhengzhou

Luoyang

Anyang

1,900

19

B

Kaifeng

Puyang

Nanyang

1,700

17

C

Weihui

1,500

15

Hubei

A

Wuhan

2,010

19.5

B

Huangshi

Yichang

Huanggang

Tianmen

1,800

18

C

Certain county-level cities

1,650

16.5

D

Shengnong

Other county-level cities

1,520

15

Hunan**

A

Changsha

Zhuzhou

1,580

15

B

Xiangtan

Yueyang

Changde

1,430

13.4

C

Zhangjiajie

Yongzhou

Yiyang

1,280

12.4

D

Loudi

1,130

11.6

Inner Mongolia

A

Hohhot

Erenhot

1,760

18.6

B

Hulunbuir

Xilinhot

1,660

17.6

C

Bayanur

Ulanhot

1,560

16.5

D

Arxan

1,460

15.5

Jiangsu

A

Nanjing

Suzhou

Zhenjiang

Changzhou

Wuxi

2,280

22

B

Yangzhou

Nantong

Lianyungang

2,070

20

C

Suqian

1,840

18

Jiangxi

A

Nanchang

1,850

18.5

B

Jiujiang

Shangrao

Pingxiang

Ji’an

1,730

17.3

C

Yichun

Fuzhou

1,610

16.1

Jilin

A

Changchun

1,780

17

B

Jilin

1,680

16

C

Siping

Liaoyuan

Tonghua

1,580

15

D

Baicheng

1,480

14

Liaoning

A

Dalian

Shenyang

1,620

16

B

Anshan

Dandong

Fushun

Yingkou

1,420

14

C

Chaoyang

Fuxin

1,300

11.8

D

Huludao

Tieling

1,120

10.6

Ningxia

A

Yinchuan

Shizuishan

1,950

18

B

Lingwu

Wuzhong

Zhongwei

1,840

17

C

Guyuan

1,750

16

Qinghai

-

-

1,700

15.2

Shaanxi

A

Xi’an

1,950

19

B

Baoji

Hancheng

Hanzhong

Huayin

Tongchuan

Weinan

Xianyang

Yan’an

1,850

18

C

Ankang

Shangluo

1,750

17

Shandong

A

Dongyin

Jinan

Qingdao

Weifang

Weihai

Yantai

Zibo

1,910

19.1

B

Binzhou

Jinning

Laiwu

Linyi

Rizhao

Tai’an

Zaozhuang

1,730

17.3

C

Dezhou

Heze

Liaocheng

1,550

15.5

Shanghai

-

-

2,480

22

Shanxi

A

Changzhi

Datong

Jincheng

Jinzhong

Lvliang

Shuozhou

Taiyuan

Yangquan

Yuncheng

1,700

18.5

B

Linfen

Xinzhou

1,600

17.4

C

Certain counties and districts

1,500

16.3

D

Other county-level cities

1,400

15.2

Shenzhen

-

-

2,200

20.3

Sichuan

A

Chengdu

1,780

18.7

B

Certain districts under the jurisdiction of Chengdu

1,650

17.4

C

Other districts and county-level cities

1,550

16.3

Tianjin

-

-

2,180

22.6

Tibet

-

-

1,850

18

Xinjiang

A

Karamay

Taxkorgan Tajik Autonomous Region

1,900

19

B

Changji

Shixenze

Urumqi

Wujyachu

1,700

17

C

Aksu

Arai

Kashgar

Korla

Kumul

Tumxuk

Turpan

Wusu

1,620

16.2

D

Atlay

Atush

Bortala

Dacheng

Gulja

Kuytun

1,540

15.4

Yunnan

A

Kunming

1,670

15

B

Certain counties under the jurisdiction of Kunming

1,500

14

C

Other county-level cities

1,350

13

Zhejiang

A

Hangzhou

Ningbo

Wenzhou

2,280

22

B

Huzhou

Jinhua

Shaoxing

Taizhou

2,070

20

C

Lishui

Zhoushan

1,840

18

D

Jiaxing

1,500

13.6

Note: Highlighted areas denote jurisdictions that updated their minimum wage in 2021.

*Certain provinces set minimum wage standards at the county or district level. The cities listed in the table are examples and are not exhaustive.**Hunan province allows each city to decide which minimum wage level to apply. The cities given as examples are therefore subject to change.

How are overtime wages calculated in China?

In China, overtime is paid differently depending on the work hour system adopted by the employer, by either standard work hours, comprehensive work hours or non-fixed work hours. The standard work hour system requires that an employee’s normal working day should not exceed eight hours, that the normal working week not exceed 40 hours, and that each employee should be guaranteed at least one rest day per week. The majority of white collar jobs in China now operate according to this model.

Rather than a unit of one week, the comprehensive work hour system adopts a set period (typically one month) as the base to calculate the employee’s

working hours. Although the distribution of hours worked during this period can be irregular, the average number of working hours per day and per week should roughly correspond to the levels set out in the standard work hour system.

Lastly, the non-fixed work hour system is geared towards positions like senior management, salespeople, and employees in the transport, warehousing and railway sectors who generally do not receive overtime payments, as it is considered impractical to measure their time spent on working.

Note that comprehensive and non-fixed work hour systems require special approval to implement.

China’s minimum wage: Understanding regional variation

Hunan, Gansu, Guizhou, and Zhejiang are among the regions most likely to adjust their minimum wages in mid to late 2021, given that they have not done so in the past three years.

Chinese regions often opt to increase minimum wages to keep pace with the cost of living increases, so other regions may also adjust their wage standards later this year.

That said, 2021 might not see many wage increases rolled out due to the coronavirus pandemic, as reducing the financial burden on enterprises and job stabilization will be prioritized. The reorientation of priorities is also set against the backdrop of an ongoing US-China trade war and an economic slowdown.

As stated earlier, Shanghai continues to have the highest minimum wage in China, followed by Beijing (RMB 2,320/US$358 per month) and Shenzhen (RMB 2,360/US$370 per month).

At the lowest end, the minimum wage in Hunan (RMB 1,130/US$174 per month) and Anhui (RMB 1,150/US$177 per month) is slightly higher than Liaoning’s (RMB 1,120/US$172 per month).

However, while China is still among the most unequal countries in the world in terms of income inequality, it has made some progress over the past decade.

According to China’s National Bureau of Statistics, the country’s Gini Coefficient dropped from 0.491 in 2008 to 0.465 in 2019, where a higher number denotes larger inequality.

Impact on China’s labor costs

Minimum wages only tell part of the story of labor costs in China.

As China’s economy moves up the value chain and transitions to innovation and services, most workers employed by foreign-invested enterprises earn above the minimum wage.

For example, workers in Shanghai made an average of RMB 9,580 (US$1,475) per month through 2019 – nearly four times the local minimum wage.

Moreover, employer social insurance and housing fund obligations add an additional 37.25 percent to an employee’s salary on average.

In 2018, China’s employed population declined for the first time ever, falling by 540,000 for a total of 776 million.

This trend is exacerbated in China’s wealthy coastal regions – the traditional hotbed for foreign investment and manufacturing – which migrant workers are leaving in favor of inland China.

According to the National Bureau of Statistics, in 2019, the migrant worker population in coastal provinces fell by 0.7 percent, while that of Western provinces grew by 3.0 percent.

For foreign investors, rising wages are an unavoidable feature of doing business in China.

Nevertheless, when other factors like productivity, infrastructure, transportation costs, and access to a massive domestic market are considered, China may still emerge as the more cost-efficient option compared to countries with lower statutory labor costs.

When comparing locations for foreign investment into China, minimum wages are a helpful barometer to gauge labor costs across different regions.

From there, identifying industry-specific wage levels, availability of talent, and access to regional incentives offer a more nuanced view of ultimate labor costs within a given region.

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