The minimum wage in China has historically been low comparatively to global standards, largely owing to its prevalent manufacturing sector, and significantly aiding processes of domestic economic growth over the past several decades.
However, the recent report composed by Dezan Shira & Associates illustrates that such a trend is becoming less of a reality, with minimum wages increasing in key provinces including Beijing, Guangdong, Shandong, Shanghai, Shenzhen, and Xinjiang among others in 2018.
The report provides an in-depth analysis for each Chinese region that was subject to fluctuating wages this year. For example, Guangdong raised wage levels for the first time since 2015, having spent these years consolidating in an attempt to improve its manufacturing competitiveness relative to rivals Vietnam and Indonesia.
Furthermore, cities among the highest monthly minimum wage in 2018 include Shanghai ($348.02 USD), Shenzhen ($316.38 USD) and Beijing ($304.87 USD), whilst in contrast, rural cities such as Liaoning ($161.07 USD), Hunan ($162.50 USD) and Anhui ($165.38) make up the lower end of the spectrum. Consequently, a theme of the report is to showcase the disproportionality between China’s urbanised and rural regions, thereby highlighting the widening extent of domestic income inequality.
Ultimately, despite the report’s indication that rising wages is a somewhat “unavoidable feature of doing business in China,” it is suggested that this may be outweighed by China’s holistic attractiveness vis-à-vis other factors, namely “productivity, infrastructure, transportation costs, and access to a massive domestic market.” All things considered, China appears to remain largely cost-efficient as a destination for investment despite reporting an annual rise of minimum wages.
Note: This article was first published by China Briefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices in China, Hong Kong, Indonesia, Singapore, Russia, and Vietnam. Please contact info@dezshira.com or visit out website at www.dezshiralcom.