In recent years, China has experienced significant economic growth, with wages rising across various industries. The country has become increasingly competitive in attracting top talent, both domestically and internationally. For expats, this means a wealth of job opportunities and competitive wages in a dynamic and fast-paced work environment. Wages in China are a primary concern and appeal for many foreign nationals and foreign companies alike. Whether your company is active or just getting set up in China, labor costs will form a major part of many expenditures, and understanding Chinese labor laws and the current state of the market in 2023 and onwards is well advised.
In this article, we will explore the current state of wages in China, including trends and developments in recent years. We will examine the differences between local and expat wages, as well as the factors that influence salary levels in different industries.
Wages in China – not a cheap labor market anymore
The opening up and economic development of China since the early 1980s have been dramatic. One of the main drivers of this was the abundant availability of cheap labor, propelling the country forward. The often-used phrase “the world’s factory” was an appropriate description, with companies and inbound investment attracted by the possibilities of low-cost manufacturing.
Over the past decade, China’s economy has undergone significant transformation. It has transitioned from being primarily known as a low-cost manufacturing hub to a more mature economy with a focus on high-tech manufacturing and service industries. As a result, the appeal for foreign investors has shifted from cheap labor to tapping into a rapidly expanding domestic market. And with these changes, wages have risen (along with the cost of living in the country)
This trend of increasing wages continues today, although rising at a slower pace that lags behind the GDP growth of the country. The economy continues to grow, prices continue to rise and skills and education continue to improve. Urban and regional differences are significant, but this gap between poor and rich provinces is expected to decrease, with a major current government focus being the reduction of rural poverty.
Chinese Employment and Labor Law
Since opening up the economy in the 1980s, China has developed extensive new laws and economic guidelines. Employment and labor are currently governed by two main legal frameworks. The 1995 Labor Law and 2008 (amended in 2012) Labor Contract Law (sometimes referred to as “Employment Contract Law”). Together these laws define the main requirements for employment, contract, termination, payment of wages, etc.
In China, employers need to be aware of several fundamental requirements outlined in the labor code. Some of the main areas these laws describe include:
1. Labor contracts: It is important for employers to establish clear and legally compliant labor contracts with their employees. These contracts define the rights and obligations of both parties and provide a foundation for the employment relationship. According to the China Labor Contract Law (2008), there are three types of employment contracts: fixed-term contracts,non-fixed-term contracts, and job contracts.
2. Work hours provisions: The labor code sets limits on work hours to protect employees’ well-being. Employers must ensure that employees working hours adhere to these provisions, which typically include maximum daily and weekly working hours, rest periods, and provisions for overtime work.
3. Compensation and overtime: Employers are required to provide employees with fair and timely compensation for their work. This includes adhering to minimum wage standards and properly compensating employees for any overtime work performed.
4. Retirement: Employers must comply with retirement-related regulations, such as providing employees with access to retirement benefits or contributing to social security programs on their behalf. The specific requirements may vary depending on the location and industry.
5. Social Security: Employers are responsible for contributing to social security programs, which typically include pension, medical insurance, unemployment insurance, and other benefits. Compliance with these social security obligations is crucial for both employers and employees.
It is essential for employers in China to understand and fulfill these requirements to ensure compliance with the labor code and maintain a positive working relationship with their employees. There are still challenges for employees and employers, however, China is striving toward fair employment laws; between protections of the workers and a competitive business environment for the employers which are supported by two main vehicles to hire staff in China, employment solutions, and company formation.
Minimum Wage in China
Minimum wage rates in China undergo an annual review and adjustment, typically taking place during the first half of the year. During this process, the government considers various factors such as inflation and shifts in the cost of living. The new minimum wage rates are established based on these considerations. The minimum wage in China varies by location and industry. Developed regions like Beijing and Shanghai have higher rates, while industries requiring advanced skills and education tend to offer higher wages.
So, what is the minimum wage in China?
As of 2023, Shanghai boasts the highest monthly minimum wage at RMB 2,590/US$400, while Beijing has the highest hourly minimum wage at RMB 25.3/US$3.9. Fourteen regions, including Beijing, Shanghai, and Guangdong, have reached the RMB 2,000 (US$308) mark for monthly minimum wage. Hebei, Shanxi, Qinghai, Guizhou, and Anhui have implemented new minimum wage standards on different dates in 2023.
It’s important to understand that the minimum wage in China represents the basic salary that employers are required to pay their employees. However, it does not include additional payments such as overtime pay, night shift allowance, special working environment allowance, and subsidies for meals, transportation, and housing. China’s minimum wage standards usually include the social insurance and housing fund contributions that employees need to pay in most regions.
What is Overtime Pay in China?
The calculation of overtime pay in China varies based on the work-hour system implemented by the employer. Here are the general guidelines:
– Overtime work: Employees are entitled to receive a minimum of 150 percent of their normal wage for each hour of overtime worked.
-Work on a rest day: If employees are required to work on a scheduled rest day that cannot be rescheduled, they should be compensated with a minimum of 200 percent of their normal wage for each hour worked.
– Work on an official public holiday: For work performed on an official public holiday, employees should receive a minimum of 300 percent of their normal wage for each hour worked.
It is important for employers to adhere to these guidelines when calculating and providing overtime pay to employees, ensuring compliance with labor regulations and fair compensation for additional working hours.
The Average Salary in China – much more than the minimum
Although the minimum wage has risen steadily over the past decade or so, it has not, in general, kept pace with rising living costs. Government regulations state that the provincial minimum wage should be set between 40% and 60% of the actual average wage. Few regions, however, reach this target, and data for 2022 (here) shows that most cities have minimums of around 25% of the actual wage, and as low as 20% in the larger cities.
For companies in China then, this means that the minimum wage whilst being an important legal regulation is not an accurate guide for planning or setting wages. Companies will struggle to attract or retain good employees if they cannot offer a livable wage.
Actual salaries (sourced here) have a much higher variance than the minimum levels. As of early 2022, average salaries in Beijing were just over 14,000 RMB / month, and just below this in Shanghai and Shenzhen. Other cities such as Chongqing and Kunming have a lower average of just over 8000 RMB.
Companies operating in China should be aware of these averages and how they continue to increase. Although the rate of increase has lessened recently, they have risen dramatically over the past decade. Rates and accurate data can be hard to obtain but a couple of quoted increases demonstrate this. GGTN reported a rise in average wages across China despite the covid outbreak and pandemic.
A useful, comprehensive, guide to salaries at different levels and in different industries in China is published by employment agency Kelly Services, this can be found here.
| Minimum Wages Across China | ||||
| Region | Districts | Monthly Minimum Wages (RMB) | Hourly Minimum Wages (RMB) | Comments |
|---|---|---|---|---|
| Anhui | A B C D | 1,520 1,350 1,250 1,150 | 16.0 14.0 13.0 12.0 | |
| Beijing | – | 2,200 | 24.0 | |
| Chongqing | A B | 1,800 1,700 | 18.0 17.0 | |
| Fujian | A B C D E | 1,700 1,650 1,500 1,380 1,280 | 18.0 17.5 16.0 14.6 13.6 | |
| Gansu | A B C D | 1,620 1,570 1,520 1,470 | 17.0 16.5 15.9 15.4 | |
| Guangdong | A B C D | 2,200* 2,100 1,720 1,550 1,410 | 20.3* 20.3 16.4 15.3 14.0 | *Shenzhen independently sets its own minimum wage. |
| Guangxi | A B C | 1,680 1,450 1,300 | 16.0 14.0 12.5 | |
| Guizhou | A B C | 1,790 1,670 1,570 | 18.6 17.5 16.5 | |
| Hainan | A B C | 1,670 1,570 1,520 | 15.3 14.4 14.0 | |
| Hebei | A B C D | 1,900 1,790 1,680 1,580 | 19.0 18.0 17.0 16.0 | |
| Heilongjiang | A B C D | 1,680 1,450 1,270 1,030 | 16.0 13.0 12.0 10.0 | |
| Henan | A B C | 1,900 1,700 1,500 | 19.0 17.0 15.0 | |
| Hubei | A B C | 1,750 1,500 1,380 | 18.0 16.0 14.5 | |
| Hunan | A B C D | 1,700 1,540 1,380 1,220 | 17.0 15.0 13.5 12.5 | |
| Inner Mongolia | A B C D | 1,760 1,660 1,560 1,460 | 18.6 17.6 16.5 15.5 | |
| Jiangsu | A B C | 2,020 1,830 1,620 | 18.5 16.5 14.5 | |
| Jiangxi | A B C D | 1,680 1,580 1,470 1,180 | 16.8 15.8 14.7 11.8 | |
| Jilin | A B C D | 1,780 1,680 1,580 1,480 | 17.0 16.0 15.0 14.0 | |
| Liaoning | A B C D | 1,810 1,610 1,480 1,300 | 18.3 16.3 15.0 13.2 | |
| Ningxia | A B C | 1,660 1,560 1,480 | 15.5 14.5 13.5 | |
| Qinghai | A B C | 1,500 1,260 1,250 | 15.2 12.8 12.7 | |
| Shaanxi | A B C D | 1,800 1,700 1,600 1,380 | 18.0 17.0 16.0 13.8 | |
| Shandong | A B C | 1,910 1,730 1,550 | 19.1 17.3 15.5 | |
| Shanghai | – | 2,480 | 22.0 | |
| Shanxi | A B C D | 1,700 1,600 1,500 1,400 | 18.5 17.4 16.3 15.2 | |
| Sichuan | A B C | 1,780 1,650 1,550 | 18.7 17.4 16.3 | |
| Tianjin | – | 2,050 | 20.8 | |
| Tibet | A B | 1,650 1,150 | 16.0 10.5 | |
| Xinjiang | A B C D | 1,820 1,620 1,540 1,460 | 18.2 16.2 15.4 14.6 | |
| Yunnan | A B C | 1,670 1,500 1,350 | 15.0 14.0 13.0 | |
| Zhejiang | A B C D | 2,100 1,800 1,660 1,500 | 18.4 16.5 15.0 13.6 | |
Foreigner Wages in China
When foreign companies start recruiting in China, salary considerations become crucial. It is essential for foreign employers to have a basic understanding of China’s salary structure, including average salary and minimum wage, as well as how employee salaries are calculated. Additionally, having knowledge of the market rates for different positions is vital to make competitive offers to prospective candidates in China. Due to the lack of data throughout China, our foreigner salary table only includes popular jobs among foreigners in the T1 cities: Shanghai, Beijing, Shenzhen, and Guangzhou.
Expat Wages in China
Expatriate managers are in high demand in specific industries in China. Sales and marketing rank at the top, followed by banking and financial services, education, human resources, advertising, manufacturing, healthcare, and the information technology sector. Yet, it is much harder to quote an “average” salary for expat workers in China. Expat working means foreigners sent to China by their companies for work. Salaries for expats vary widely depending on skill set, experience, and language abilities. We share some thoughts here on the market and wages for expats in China:
The market has changed over the past decade as the skills and experience of local Chinese graduates have risen. Many of the mid-level positions that expats used to be hired for can now be filled at lower cost and more effectively by local staff. Expats are still regularly hired into more senior or skill-specific roles by both domestic and foreign companies. Expat salaries tend to increase with experience but also with experience working in China and the ability to speak Mandarin Chinese.
Salaries offered will often be much higher for an expat moving from overseas than for an expat hired locally in China. Benefits and total salary packages need to be considered as these are often much more comprehensive than would be offered to a local employee. Expat health insurance, housing allowances, and possible inclusion for family living, insurance, and education can be very costly if offered.
Note that various benefits (including housing) can be offered free from income tax. See our separate article for more details on this.
Referring to actual expat wages, data from twobirds.com broke the news that expats will stop benefiting from tax breaks on expenses in December 2023. A major source of tax breaks that had previously been allowed to foreign nationals on the grounds of not benefiting as much from Chinese social funds. Other broad statistics on foreigner wages in China:
| Profession | Salary Range (RMB) | Salary Range ($) |
| English Teachers | RMB144,000 – RMB 202,000 | $20,000 – $28,000 |
| Sales/Marketing Managers | RMB231,000 -RMB 318,000 | $32,000 – $44,000 |
| Engineering Professionals | RMB256,800 -RMB 889,200 | $35,492 – $122,897 |
| Programmers/Web Developers | RMB115,764 -RMB 325,588 | $16,000 – $45,000 |
| Health Professionals | RMB303,600 -RMB 1,392,000 | $41,955 – $192,363 |
| Human Resources Managers | RMB361,000 | $50,000 |
- Salaries at the lower end of approximately 20k to 28k US$ for English teachers in China, or front office/account senior manager roles in sales, marketing or communications of 32k to 44k US$.
- An HR Manager with 6+ years’ experience salary of 50k US$, and similar experience in sales/marketing salary range of 38k to 80k US$.
- At the upper end, CFO roles could earn up to 240k US$, an experienced lawyer 205k US$, and a Managing Director in Sales / Marketing upwards of 315k US$.
It is also interesting for companies to note that expat wages in China are amongst the highest in Asia. A region-wide survey in May 2018 (from ECA International) shows that total expat salary packages for the mid-manager level were the third highest in China (after Japan and India), at nearly US$280,000. This is interestingly a decrease from the levels they quoted in 2016 and 2017 (when China was the second highest).
Conclusion
We hope that this article helped you to clarify some aspects of wages in China. These are the primary concern of any foreign company operating in China, both while preparing for company registration and during operation. Wages in China have experienced significant growth and transformation in recent years, reflecting the country’s expanding economy and its increasing integration into the global market. Both local workers and expats have benefited from this trend, with competitive wages and job opportunities available across various industries. Salaries for expats vary widely depending on skill set, experience, and language abilities. Labor costs will form a major part of many companies’ expenditures, and understanding the laws and market realities as early as possible is well-advised.
