Labor Market

& Salary Report

2019 | 2020
Brief Edition

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 Labor Market
& Salary Report
2019 | 2020
Brief Edition

GERMAN CHAMBER OF COMMERCE IN CHINA

www.china.ahk.de/chamber

© 2019 by the German Chamber of Commerce in China. Thank you for not reproducing this report either in part or in full
without prior consent of the German Chamber of Commerce in China.

While every effort has been made to provide accurate information in the preparation of this report no responsibility or
liability is accepted for errors or omissions of fact or for any opinions expressed herein. Opinions, projections and estimates
are subject to change without notice. This report is for information purposes only. In no event shall the German Chamber of
Commerce in China, Direct HR Group or their employees be liable for any losses or other consequential, incidental,
exemplary or special damages relating in whole or part to the use of information contained in this report.

Cover picture by Kimi Lee on Unsplash

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KEY DEVELOPMENTS
Economic Environment ▪ After last year’s mild uptick, the expected wage increase
returns to a descending path that has been a trademark
▪ China’s GDP in the first half of 2019 registered a 6.3 feature since measurements started in 2012. German
percent growth, compared to the same period last year. companies anticipate a 5.53 percent increase in 2020.
▪ Although the GDP is growing at its slowest pace since ▪ At the regional level, the slowdown is more pronounced in
1992, the outcome is still considerable given the global East China. In North China, Beijing and Tianjin will put
context, where protectionism is on the rise, and there are forward increases above their 2019 expectation.
concerns on the U.S. economy slowing down in 2020. Shenzhen and Guangzhou in South China present the
▪ Despite all the narrative around trade disputes, the highest expected increases.
underpinnings of China’s economy remain within its ▪ The automotive industry projects an increase of 5.26
domestic market. Imports, an internal demand-driven percent in 2020, 1.37 percentage points (p.p.) below the
metric, continued to plunge 5.6 percent in July year-on- 2019 forecast. In contrast, machinery / industrial
year (YoY). Inflation was at 2.8 percent in July, the second equipment presents a 5.84 percent expected wage
highest since January 2016. increase in 2020, 0.05 p.p. below that of 2019.

Labor Market and Wage Developments Expected and Effective Wage Increases in China
(in 2019, in %)
▪ The annual wage in China averaged RMB 82,461 in 2018,
5.99 5.87
an 11 percent increase in comparison to 2017, according
to data from the National Bureau of Statistics in China
(NBS).
▪ For the first time since 2015, there has been a decrease
of 0.2 percent in the migrant population of China’s eastern
regions. Expected Effective
▪ The country will relax its hukou residency rules in small
and mid-size cities in 2019. Cities with a population under
▪ The 5.87 percent effective increase reported in 2019
does not fall far from the 5.99 percent expected increase
3
three million are required to completely lift all restrictions
reported last year.
on household registrations. Cities with a population
between three and five million are required to relax or
▪ Beijing, Tianjin, Shenzhen, and Guangzhou report effective
wage increases in 2019 above their respective expected
comprehensively lift household restrictions. Super cities
increases as measured last year. Shanghai delivers an
(population between five and ten million) and megacities
effective 5.65 percent increase, 0.41 p.p. lower than
(population over ten million) will be exempt from the
initially anticipated.
reform.
▪ In 2018, for the first time, the number of migrant workers
▪ The median total cost per employee for the 483
companies contributing to the survey this edition is RMB
employed in the secondary sector (49.1 percent) was
15,000 / month. That is 2.2 times higher than the latest
lower than in the service sector (50.5 percent).
official national average compensation in China, reported
by the NBS.

Wage Developments at German Companies

Productivity and HR Developments
Expected Wage Growth Development at
German Companies in China (%)
▪ 52.5 percent of German companies consider wage levels
as reasonable given productivity and staff qualifications.
10.20
▪ 60.1 percent of the companies have no strategic changes
8.90 8.80
planned due to increasing labor costs. Relocation to lower
8.10

7.10
labor cost areas, either within China or abroad, is
6.23
considered by ten percent of contributors.
5.90 5.99
5.53 ▪ Data management and analysis, creativity and innovation,
2012

2013

2014

2015

2016

2017

2018

2019

2020

and critical thinking represent the set of skills from local

staff with the highest margin for improvement.

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Content
I Labor Market Environment 5

1. Growth Developments 5
2. Business Sentiment & Price Developments 8
3. Labor Market Structure 10
4. Labor Market Developments 14
5. Notes 15

II Wage Developments in China 17

1. National Wage Developments 17

2. Provincial Wage Developments 18
3. Minimum Wages and Wage Guidelines 19
4. Wages by Industry and Ownership 21
5. Productivity 23
6. Notes 25

III General Survey Results 26

1. Expected Wage Developments at German Chamber Companies 26

2. Regional Wage Developments 28
3. Effective Wage Developments 30
4. Wage Levels 33
5. Compensation Levels: Perception 35
6. Productivity 37
7. Wage Determination 41
8. HR Challenges 42
9. Gender Wage Equality 45
4
10. Additional HR Data 46
11. Foreigners 46
12. General Results Overview 48
13. About the Survey 50
14. Profile of Contributors 50
15. Notes 52

IV Appendix: Definitions 53

V Compensation Data 53
54
1. Introduction
CONTACT 54
2. Wages and Wage Increases 55
To access specific compensation data, please contact:
3. Segmentation Variables 61
4. Region 67
Ms. Philippa Hungar
5. East 73
Project Manager Communications
6. North 79
German Chamber of Commerce in China | Shanghai
7. South & Southwest Tel.: +86 21 5081 2266 Ext. 1846 85
8. Industry hungar.philippa@sh.china.ahk.de 91
9. Company Size salaryreport@sh.china.ahk.de 97
10. City Tier
11. Total Cost per Employee: Median and Percentiles

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I Labor Market Environment GDP Growth China (%)

Quarterly Data, 2012-2019

1. Growth Developments 9%

7.9 2019
8% 6.4
7.3 Q1
At 6.2 percent, the second quarter of 2019 remained within

2012 Q4
6.9 6.2 2019
7% Q2
the stated GDP growth target for the year (between 6.0 to

2014 Q4

2017 Q4
6.5 percent). 6%

5%
China’s GDP in Q2 2019 showed an economy that is growing
at its slowest pace since quarterly readings started almost 4%

2012 2013 2014 2015 2016 2017 2018 2019

three decades ago in 1992.1 Despite consensus that a
slowing trajectory is laying ahead, a 6.2 percent growth is still Source: National Bureau of Statistics China (NBS). Preliminary accounting results.
a considerable figure, especially in a global context where
protectionism is on the rise, and where one given concern is
the U.S. economy slowing down in 2020.2 Monthly indicators China’s GDP Second Quarter and First Half 2019 (%)
also signaled a slow down: in July retail sales went up 7.6 Contribution to GDP by Sector. (Year-on-Year Growth rate)
percent YoY, 2.2 p.p. below June; industrial output grew 4.8 Tertiary Tertiary
percent YoY, 1.5 p.p. down the growth rate from June; and 52.8 (7.0) 54.9 (7.0)

cumulative fixed-asset investment rose 5.7 percent YoY, 0.1

2019Q2 2019H1
p.p. below June. (6.2) (6.3)
Primary Primary
6.1 (3.3) 5.1 (3.0)
The most dynamic sector continues to be services: the
tertiary sector did not only contribute to nearly 55 percent of Secondary Secondary
41.1 (5.6) 39.9 (5.8)
the GDP in the first half of the year but grew seven percent
YoY. The secondary sector (mining, manufacturing, Source: NBS. Preliminary accounting results.

construction) makes up for 39.9 percent of the GDP in the

first six months of 2019 and presents slower growth (5.8
percent YoY). Contribution to GDP by Sector (%)
5
Quarterly Data, 2015-2019 Tertiary Secondary Primary
At a more granular level, if there is one area of the economy
that shows impressive growth that is information, software

38.6
39.0
38.9
38.0

39.9
40.2

40.4
40.2
39.5

40.5

and information technology services (information and

41.3

40.2
39.6

40.7
40.5
41.0

39.9
40.9

communication technology (ICT)). In the first half of the year,

50%
it grew by 20.6 percent. As of today, it only contributes a
57.3
56.6
56.5

56.3

54.9
54.6

54.3
54.0

54.0

53.4
52.8

52.8
52.4

52.2
51.6
51.6
51.3

50.2

share of 4.1 percent of China’s economy. However, since

technology is an essential strategic asset at the center of any
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
economy that strives for innovation and enhanced 2015 2016 2017 2018 2019

productivity, it is worth to highlight China’s growth in this Source: NBS. Data is cumulative: the contribution to GDP from a sector in a quarter for
any given year includes the previous quarter/s within that year.
area. ICT combines, following the OECD definition, both
manufacturing and services industries: manufacturing of
computer, communication equipment and other electronic Contribution to GDP and Growth by Industry (%)
equipment (both production of and investment in), software First Semester 2019
programming and information services, publishing, Contribution to GDP Year-on-year Growth
5.8
broadcasting, or telecommunications.3 The ICT industry,
according to the accounting from NBS refers only to services 5.4
29.5 20.6
and no further details are provided about the specific types 6.0
5.9
7.3
6.2
7.3
2.5 16.6
3.2 7.8
9.5 8.4
of services that have fueled the industry’s growth. 5.4 6.1 4.5 1.8 6.9 4.1 2.8
Transportation
Manufacturing

Construction

Other industries exceeding China's first half year's average of

Agriculture

Real Estate
Hospitality
Wholesale

Business
Services

Services
& Retail

Finance

6.3 percent were business services (7.8 percent YoY) and

Other
ICT

finance (7.3 percent YoY).

Source: NBS.
The two largest contributors to GDP remain, on one side,

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manufacturing (29.5 percent of China’s economy in the first Growth of Retail Sales, Production and Fixed-asset
semester), and other services (16.6 percent). Other services Investment. Monthly (%)
are miscellaneous and combines scientific research, services Retail sales YoY Industrial production Fixed-asset investment
(monthly) YoY (monthly) YoY (monthly)
to households, healthcare, education, and others: no further
breakdown is available to get individual information for each 14%

of sector. 12%

10%
When looking at fixed asset investment (long-term use of
8% 7.6
assets, such as land, buildings, and equipment), the total
5.7
6%
investment reached RMB 34,889.2 billion during the first
4% 4.8
seven months of 2019. At the time of this writing (August Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jul
2019), a breakdown of how investment trickles down for 2015 2016 2017 2018 2019

specific industries has not been provided. The only Source: NBS. Retail sales and value-added in industrial production growth rates compared to the same
period last year. Data is cumulative for fixed-asset investment (total amount of money invested in the in
information available is the variation experienced on a YoY construction and purchase of fixed assets).

basis. The industries that presented a higher increase in

investment were: mining, in the secondary sector, with a 27.4 Retail Sales of Consumer Goods, January - July 2019
percent increase YoY; education, 18.5 percent; culture, Absolute value (RMB 100 million) and Year-on-Year Growth
sports, entertainment (equipment and infrastructure) 15.8 Rate (%)
July January to July
percent; railway transportation infrastructure, 12.7 percent;
and investments in the manufacturing of telecommunications Value YoY Value YoY

and computer equipment, 10.5 percent. The most significant Grain, Oil, Food 1,107 9.9 8,064 10.3
declines in fixed-asset investment came from the following Beverages 180 9.7 1,173 9.9
activities: investment in the manufacturing of railways, Tobacco and Liquor 287 10.9 2,199 6.6
shipbuilding, and aerospace, declined by 10.4 percent in
Garment, Footwear, Knitwear 934 2.9 7,499 3.0
comparison to the first seven months of 2018; investment in
Cosmetics 202 9.4 1,666 12.7
food processing, 7.6 percent YoY decline; and manufacturing
God, Silver, Jewelry 175 -1.6 1,529 2.9
of electrical machinery and equipment, decreased by 7.5
Commodities 462 13.0 3,294 13.9
percent YoY.4
6 Household appliances and AV Equipment 713 3.0 5,113 6.2

Retail sales of consumer goods reached RMB 22,828.3 billion Traditional Chinese , Western Medicines 485 11.6 3,424 11.0

in the first seven months of 2019, which marks an 8.3 Cultural and Office Appliances 258 14.5 1,739 5.6
percent YoY increase. Online sales of physical products Furniture 163 6.3 1,062 5.8
totaled RMB 4,423.3 billion, about 20 percent of all retail
Communication Appliances 338 1.0 2,581 6.5
sales and grew 20.9 percent YoY.
Petroleum and Related Products 1,641 -1.1 11,288 2.5

Retail data for specific sectors is available in absolute values Automobile 3,056 -2.6 22,147 0.6

(sales volume). One of the most important contributors to Building and Decoration Materials 173 0.4 1,083 3.1

retail sales is automotive sales, which accounts to almost ten

percent of the total retail sales in the first seven months of Source: NBS.

the year.

From January to July, according to data provided by the NBS,

automobile sales went up by just 0.6 percent, in stark
contrast to the 8.3 percent YoY increase in retail sales in the
same period. In July 2019, automobile sales declined by 2.6
percent YoY.5

During the first seven months of 2019, fixed-asset

investment in the automotive industry increased 1.8 percent
YoY, compared to 5.7 percent for all manufacturing; the
number of automobile units produced decreased 12.8
percent YoY, amid an overall 5.8 percent YoY increase of the
overall industrial output.

On its first seven months of the year review, China’s

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Association of Automobile Manufacturers (CAAM) reported Manufacturing in China, January – July 2019 (%)
similar results. The 13.9 million units produced in the first Fixed-asset Investment and Industrial Output. Evolution
seven months of 2019 represent a 12.1 percent decrease Year-on-Year Growth Rate

YoY; the 14.1million units sold in the first seven months of

Fixed-asset Industrial
2019, a 11.4 percent decline YoY. In July alone, vehicle sales investment. production.
Increase Rate (YoY) Increase Rate (YoY)
totaled 1.8 million units, a decline of 4.3 percent YoY.6 In
2019, the main cause for such reduction seems to be the ALL Manufacturing 3.3 6.1
decision, urged by the central government, by 15 cities and
Of Chemical Raw Material &
provinces (which account for more than 60 percent of the Chemical Products 9.4 4.6
total auto sales in China) to fast-track the adoption of a new
Of Medicines 6.9 6.7
regulatory framework imposing cars built under the so-called
China stage-6 emission standards, ahead of the original 1 July Of Fabricated Metal Products -5.2 7.3
2020 deadline. Such a move created a vacuum in the market:
Of General-Purpose Machinery 2.1 4.5
consumers were uncertain about whether to buy stage-5 cars
fearing to be unable to resell them. Such uncertainties lead to Of Special Purpose Machinery 7.2 7.7
a prompting decline of demand and thus a decline of the
Of Automobile 1.8 -12.8
number of units sold.7 In addition, as such standard was not
due to apply until 2020, manufacturers and retailers were not Of Railways, Shipbuilding,
Aerospace, Other -10.4 11.4
able to provide the market with enough stage-6 certified cars Transportation Equipment

due to lack of stock.8

Of Electrical Machinery &
Equipment -7.5 9.7
The headwinds faced by the automotive industry predate Of Telecommunications
2019. The total number of cars produced in China had Equipment, Computers and 10.5 9.1
Other Electronic Equipment
already decreased by 4.1 percent in 2018 compared to 2017.
It was the first time since 2009 that car production went Source: NBS.

down on a yearly basis. Such decline was due to a decrease

in output of passenger cars (5.2 percent decline), whereas
commercial vehicles stood up 1.7 percent.9
7
Readings on China’s macroeconomic data depends very much
on the vantage point of the observer. The fact that retail
sales have gone up by 8.3 percent in the first seven months
of 2019 does not affect actors invested in the automotive
sector, who have reasons for concern based on the recent
domestic market developments.

The case for the automotive sector shows that the

underpinnings of China’s economy remain within its domestic
market, despite all the focus on trade frictions might suggest.
In July, exports rose unexpectedly 3.3 percent YoY, after a
fall in June by 1.3 percent YoY. Imports, an internal demand-
driven metric, continued to plunge 5.6 percent in July,
following a 7.3 decrease in June.10 China’s exposure to the
world has fallen in relative terms, whereas the world’s
exposure to China has increased.11

However, the role of trade frictions should not be

underestimated. Apart from the effects of these tensions on
trade volumes, the impact on security and confidence is
severe in any well-functioning economy.

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2. Business Sentiment & Price Developments Business Sentiment 2019

Purchasing Managers’ Index (PMI)
Services Manufacturing
The unfolding of trade tensions between the U.S. and China,
which have been going on for more than a year, reached new
peaks in August.12 In addition, on 24 May 2019, the China 54.4 54.5
53.6
Banking and Insurance Regulatory Commission (CBIRC) took 52.7
52
over Inner Mongolia’s based Baoshang Bank alleging “severe 51.6
51.1
credit risk”.13 Despite being a minor player, the move rattled
Chinese markets, with fears that Baoshang Bank could be the 50.8
48.3 50.2 50.2
49.9 49.4 49.9
first of many. This prompted the People’s Bank of China
JAN FEB MAR APR MAY JUN JULY
(PBOC) to announce that no further moves were planned to
intervene in other banks, and that it would inject additional
Source: Caixin / Markit. PMI values >50 indicate expanding business; values <50 indicate
cash reserves into the banking system.14 contraction.

Both events are taking their toll on the business sentiment.

China’s Caixin / Markit Purchasing Managers’ Index (PMI)
Price Level Development 2015-2018
shrank considerably in June, although it attenuated its fall in
Variation over the Same Month in the Previous Year (%)
July. June’s mark at 49.4 was its lowest reading since January
Consumer Price Index (CPI) Producer Price Index (PPI)
when the indicator came in at 48.3. In July it bounced to 10%

49.9. Caixin / Markit’s index monitors private companies and 8%

6%
smaller firms than the official PMI from NBS. The latter 2.8
4%
focuses on big businesses and state-owned enterprises and 2%

presented a similar trend: remaining at 49.7 in July, an 0%

-0.3
increase from 49.4 in June. Both manufacturing PMIs -2%

-4%
indicate the manufacturing sector contracted (in both indexes -6%
the 50-point mark separates growth from contraction).15
SEP

SEP

MAR

SEP

JAN
JAN
MAR

JAN
MAR

JAN

MAR
MAY

MAY

MAY

MAY
NOV

NOV

NOV
JUL

JUL

JUL

JUL
The deterioration in the PMI sentiment data was expected, Source: NBS.

8 after the trade tension escalated in May 2019. From 11 May,

tariff increased to 25 percent from the earlier ten percent
rate – applied to USD 250 billion worth of Chinese imports Breakdown of Consumer Price Developments
to the United States. The U.S. was also putting together a Average Variations from January to June 2019 (%)

tariff of up to 25 percent on a further USD 300 billion of 4.3

Chinese goods, turning up the pressure on the Chinese 2.5 2.6

1.8 1.9
1.1
economy. China reacted by placing variable tariffs on USD 60
billion of U.S. imports. Industrial profits stood at RMB 515.39
billion in April (only a month before the escalation of the
Household

Education
Housing
Clothing

articles &
services

& Leisure

Healthcare
Food, Tobacco

-1.1
trade tensions), decreasing by 3.7 percent compared to a
Communication
Transportation &
&Liquor

year earlier. This was the largest percentage decline since

December 2015. With further tariffs about to kick in on
Chinese exports, there is a great possibility for the downward
trend to continue.16
Source: NBS.

The PMI is an important economic indicator globally watched

by investors to anticipate economic trends. The fall in the The only signal of détente came in the weeks leading to and
headline index was mostly driven by weaker new orders during the G20 Summit, held in Osaka (Japan) at the end of
(weak demand).17 Export orders dropped sharply, suggesting June, where Presidents Xi and Trump agreed to resume trade
the U.S. latest tariff hike may already be undermining foreign talks. However, such respite was short lived: on 1 August, the
demand. While the official NBS and Caixin non- Trump administration said U.S. would impose ten percent
manufacturing PMIs remained above contraction levels in tariffs on another USD 300 billion of Chinese goods, starting
July, 53.7 and 51.6 respectively, their stagnation and decline 1 September; on 5 August, the U.S. Department of Treasury
point to continued skepticism and challenges for China’s declared China in a press release to be a "currency
economy.18 manipulator".19

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Weaker demand caused a slowdown in manufacturing

activity which decreased producer prices (0.3 percent decline
YoY). Particularly weak was the evolution of prices for oil and
natural gas extraction, and paper and paper product
manufacturing, which decreased by 8.3 percent and 7.1
percent, respectively, compared to the same period last
year.20

July’s consumer prices grew in annual terms (2.8 percent)

driven by higher food prices: fruit prices increased by 39.1
percent compared to a year earlier, while pork prices went up
27 percent. This increase was caused by extreme weather
conditions and an outbreak of African swine fever that has
reportedly cut the pig population in China by about a third
from 360 million.21 The 2.8 percent inflation in July 2019 is
the second highest since January 2016 (the highest being 2.9
percent, in February 2018).

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3. Labor Market Structure Distribution of Urban & Rural Population in China (%)
Urban Rural
China’s decades-old household registration system, the
hukou, underwent a significant shift in 2019. The hukou
system designates a resident’s status as being either rural or 50.1 48.7 47.4 46.3 45.2 43.9 42.7 41.5 40.4

urban based on the resident’s registered birthplace. It

establishes a worker from the countryside not being entitled
to public services in a city, despite working and living there.
54.8 56.1 57.3 58.5 59.6
49.9 51.3 52.6 53.7
In yet another move to foster urbanization, the country will
relax its hukou residency rules in small and mid-size cities.
The announcement came on April 2019, via the National 2010 2011 2012 2013 2014 2015 2016 2017 2018

Development and Reform Commission (NDRC).22 Under the

Source: NBS.
2019 Urban Development Plan, China aims to increase its
urbanization rate by one p.p. this year, to stay on the course China’s Age Demographic Composition of Population (%)
of its 60 percent urbanization target established at the 13th >65 years Aged 15 to 64 years Aged 0 to 14 years
Five Year Plan (FYP). China is well poised to achieve it: by the
end of 2018, the urban resident population in China totaled 7.0 7.7 8.9 10.5 11.9 14.2
831.4 million, 59.6 percent of the country’s total.23 At the
current pace, urban population could reach 61 percent by
70.1
2020. 72.0 74.5 73.0 71.2 69.2

The 2019 Urban Development Plan states that all cities with
a population under three million to “completely lift” all 22.9 20.3 16.6 16.5 16.9 16.6
restrictions, and cities between three and five million
2000 2005 2010 2016 2018 2025*
“comprehensively lift or relax” restrictions on household
Source: NBS; *2025: Forecast from World Bank.
registration.24 Outside the scope of the reform are left
China’s super cities, between five and ten million (Chongqing,
Distribution of Workforce Across Sectors (%)
Tianjin, Wuhan, Chengdu, Nanjing, Zhengzhou, Hangzhou,
10 Tertiary Secondary Primary
Shenyang, Changsha), and megacities with populations over
ten million (Beijing, Shanghai, Shenzhen, Guangzhou).25 26.1
31.4 29.5 28.3 27.7 27.0
38.1 36.7 34.8 33.6

Therefore, the announcement aims mostly to tier-3 and tier-

28.8 28.1 27.6
4 cities, adding pressure to municipal governments to invest 29.5 30.3 30.1 29.9 29.3
27.8 28.7
in improving their public services offerings. The largest tier-1
and some tier-2 cities, often the most attractive to migrant 40.6 42.4 43.5 44.9 46.3
34.1 34.6 35.7 36.1 38.5
workers in terms of job expectations but not in living costs,
will continue to have more restrictive hukou policies.26 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

With the relaxation on household registration conditions, in

the context of a slowing economy and a rapidly aging
population, the government expectation is to reboot migrant
flows, by removing obstacles when relocating to small or mid-
size cities (more on migrant workers later in this section).
Under the new regulations, migration pressure should be
released of tier-1 cities – where labor and resources are
converging disproportionately – and redirect migrant worker
flows into tier-2, tier-3 and tier-4 cities, which are in higher
need of a boost in their urbanization, housing prices,
consumption, and productivity.
A further lever the Chinese government could implement to
alleviate the pressing issue of a shrinking labor force is an
increase in the age of retirement. China’s average life
Source: NBS.
expectancy is 76.4 years, according to 2017 data from the
World Bank.27 Retirement age varies: 60 years for males, 55
for females in civil service jobs, 50 years otherwise. Increasing
the retirement age has been the subject of discussion for
several years now, as it could positively impact China's labor
force supply and pension system (in the short term).
However, there has not been any concrete policy
implementation.
China's working population decreased from its peak in 2011
of 925 million to 897 million in 2018. Back then, the ratio
worker to pensioner was 3.1-to-1. By 2050, a third of China’s
population will be over the age of 60. The Ministry of Human

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Resources and Social Security (MOHRSS) estimates the ratio proposals have not been put forward to tackle the
worker to pensioner will decrease to only 1.3-to-1.28 In fundamental imbalances currently present in China’s labor
mainland China, the number of citizens older than 60 hit 249 market structure.
million in 2018, which amounts to about 18 percent of the
total population.29 According to an analysis by sociology Prof.
Wang Feng, University of California, if China was to maintain
the current welfare benefits at the current aging pace,
spending on education, healthcare, and pensions could go up
from ten percent of the GDP to 23 percent by 2050. 23
percent of the GDP equals the share of the total government
spending today.30

In 2016, China raised the limit of how many children all

families could have to two children, hoping to foster a baby
boom. Though 2016 saw a brief uptick, birth rates have fallen
in 2017 and 2018.31 There were 15.2 million births in 2018,
a decline of more than eleven percent from 2017.32 The
slowing rates of new births paired with an increase of life
expectancy creates challenges for the government. First, a
smaller working population in the future could cause
difficulties in paying pensions for an increasing retired
population; second, a shrinking labor force could reduce
consumer spending and have an impact on the economy in
China, reinforcing, in a negative loop, the difficulties to pay
pensions.33

According to a report from the World Social Security Center

at the Chinese Academy of Social Sciences, the urban worker
pension fund will reach its peak at RMB seven trillion in 11
2027. Following that, it will drop steadily reaching zero by
2035. Social security contribution rates are mandatory
(composed by up to 20 percent of the employees’ salaries by
the employer, and another eight percent by the employees).
To add further stress to the pension system, China’s State
Council announced in March 2019 the employer pension
contribution rate would be cut to 16 percent, as part of a
package of measures designed to support businesses.34

Despite China’s pension funds being critical to the country’s

social security system, the fund would run on a deficit
without subsidies from the central government: RMB 528.5
billion have been budgeted to support social security
payments in 2019, a 9.4 percent increase from the previous
year.35 Were those subsidies to be put on hold,
approximately half of China’s provinces would be geared
towards pension fund deficit by 2022, compared to just six
provinces in 2015.36 The central government created a
special fund in July 2018 to shift pension funds from
provinces with large working populations, like Guangdong, to
more impoverished regions where the number of retirees is
large, like Liaoning.37

Besides initiatives, like the 996 working hour system (working

from 9 am to 9 pm, six days a week),38 more sustainable

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Migrant Workers Migrant Workers Distribution: 2017 & 2018

In millions: 2018, (2017)
Migrant workers have been contributing to China’s economic
success for the past three decades. As the country bet its Local migrant workers
115.7
economic development to its eastern coast, millions migrated
(114.7) Migrant
to cities there. Workers settled around the three main workers going
industrial regions: the Bohai Bay Economic Ring, the Yangtze Total outside: Inner-
288.4 province
River Delta, and the Pearl River Delta. Migrant (286.5) 96.7
workers going (95.1)
Migrant workers amount to 20.6 percent of China’s total outside: Inter-
province
population. As of 2018, the number of migrant workers 75.9
totaled 288.4 million, according to data from the NBS.39 That (76.8)

is a 0.6 percent increase in comparison with 2017, the lowest

Source: NBS.
increase during the period from 2010 to 2018, putting an
end to two consecutive years of accelerated growth.
Growth Rate of Migrant Workers (%)
Among migrant workers, local migrant workers (those working Total migrant Migrant workers Local migrant
workers outside (inner+inter) workers
within the villages and towns where their hukou is) grew by 5.9
5.5 5.4
0.9 percent YoY, 1.1 p.p. below 2017. Migrant workers going 5.4
5.2 4.4
out (to work outside of the villages and towns where their 3.9 3.6
2.8 3.4
2.7
hukou is) grew at 0.5 percent YoY, one p.p. slower than in 2.4
3.4 2.0
2017.40 Migrant workers going out to seek jobs inside their 3.0 1.9
1.3 1.5 1.7
0.9
1.7
province increased by 1.7 percent (96.7 million in 2018, 95.1 1.3 1.5 0.6
0.4 0.3 0.5
million the year prior), whereas the number of migrant 2010 2011 2012 2013 2014 2015 2016 2017 2018
workers going out seeking jobs across provinces experienced
a 1.2 percent decrease (75.9 million in 2018, 76.8 million in Source: NBS. Migrant workers outside inter province: Working in a province other than
that of their household registration; Migrant workers outside inner province: Working in
2017). the same province of their household registration.

Migrant workers concentrate mostly in China’s eastern and

Migrant Worker Distribution and Evolution (%)
12 central regions, accounting together for 69.2 percent of the By Region in 2018 and Evolution Versus 2017
overall migrant working population.41 For the first time since
2015, there has been a slight decrease in the migrant West East
27.5 36.1
population in eastern regions (down 0.2 percent). In the other
areas, despite the growth, its pace has been reduced in some
instances by nearly a third. The migrant working population in Northeast 1.3
3.4 1.3
China’s central region grew 0.9 percent YoY, half the 0.9

increase in 2017; in Western China, the growth rate was 1.3 Central
33.1
percent YoY in 2018, two p.p. below 2017; Northeast China, -0.2

which accounts only for 3.4 percent of the migrant working 2018 Growth over 2017 (in %)

population, saw a 1.3 percent YoY increase in 2018, 1.8 p.p.

Source: NBS. Starting from 2016 the Northeast region was added into the official
below 2017’s growth. reporting.

As pointed out in previous editions of this report, the number Migrant Workers Distribution of Employment by Sector
of Economy 2015 - 2018 (%)
of migrant workers employed in the secondary industry
Tertiary Secondary Primary
(manufacturing, mining, construction) has been steadily
declining. For the first time, in 2018 the number of migrant 0.4 0.4 0.5 0.4

workers employed in the secondary sector was lower than in 51.5 49.1
55.1 52.9
the services sector: 49.1 percent in the secondary sector,
50.5 in the services sector.

At the specific industry level, the largest number of migrant 44.5 46.7 48.0 50.5

workers are employed in manufacturing & mining (27.9

percent of all migrant workers) and construction (18.6 2015 2016 2017 2018

percent). Manufacturing & mining saw a decrease of two p.p. Source: NBS.

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in the total number of migrant workers in comparison with Migrant Workers Distribution of Employment by
Industry. 2017 and 2018 (%)
2017. In 2018 construction experienced a decrease of 0.3
p.p. over its 2017 employment contribution. 2017 2018
Secondary Tertiary
Sector Sector
In the tertiary sector the migrant worker percentage
29.9
increased for the following industries: real estate (residential 27.9

services, repairs, and other services), with 12.2 percent of the 18.9 18.6

total migrant worker employment; wholesale and retail, 12.1 12.3 12.1 11.3 12.2 11.6 12.0
6.6 6.6 6.2 6.7
percent; and other services, 12 percent.

According to official data, the monthly income of a migrant Manufacturing & Construction
Mining
Retail Transportation Hospitality Real
estate
Other
services
worker averaged RMB 3,721 in 2018, a 6.8 percent YoY
increase. The highest industry-specific YoY increase is for
Source: NBS. Agriculture (0.4%) and other secondary industries (3.5%) not included in the
manufacturing and mining migrant workers, with an 8.4 graphic.

percent jump and an average monthly income of RMB 3,732.

Construction and transportation present a 7.4 and 7.3 Migrant Workers Monthly Income (in RMB)
percent YoY increase, respectively. The current average
Income 2017 Income 2018 Growth year-on-year (%)
monthly income for migrant workers in construction
10.0

moderately rose to RMB 4,209, and in transportation RMB 8.4

9.0
7.4 7.0 7.3
4,345. The lowest income levels are for real estate, 6.8 8.0

6.0

4,345
7.0

hospitality, and retail workers.

4,209
4000

6.0

4,048
3,918 4.3
3,732

5.0

3,721
The average age of a migrant worker is 40.2 years, 0.5 years

3,485
4.0
3,444

3,263

3,202
3,148
3.0

3,048

3,022
older than last year. China’s migrant working population is

3,019
2.0

1.0

aging rapidly: those older than 40 represent 47.9 percent of 2000 0.0

Manufacturing Construction Retail Hospitality Real estate ALL

the total as of 2018, whereas in 2011 they made up for 38.3 & Mining
Transportation

percent. The youngest cohort, aged 16 to 30 years, accounts

Source: NBS. No data provided for “Other services”.
for 27.6 percent in 2018, as opposed to 39 percent in 2011.
Migrant Workers Distribution by Education in 2018 (%)
13
and Comparison with 2015 (p.p.)

Elementary
School Junior High
15.5 0.1 No Schooling
School
No Schooling 55.8
1.2 1.5 Elementary

Tertiary
-3.9 Jr. High School
10.9

-0.3 Sr. Middle School

Senior Tertiary 2.6

Middle
School
16.6 Variation over 2015 (in p.p.)

Source: NBS.

Age Composition of Migrant Workers, 2015 - 2018 (%)

>50 years Aged 31 to 50 years Aged 16 to 30 years

17.9 19.1 21.3 22.4

49.2 49 48.8 50

32.9 31.9 29.9 27.6

2015 2016 2017 2018

Source: NBS.

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4. Labor Market Developments Summary of Labor Market Developments

Metrics Last Previous Reference Frequency
China’s urban unemployment rate, provided by the MOHRSS,
Employed Population
77,586 77,640 Dec. 2018 Yearly
amounted to 3.67 percent in the first quarter of 2019.42 The (Tens of thousands)

rate is below the surveyed unemployment rate of five percent Unemployment Rate
3.67 3.80 March 2019 Quarterly
(%)
in June, provided by the NBS, which it is based on a monthly
Unemployed Population
974 975 Dec. 2018 Quarterly
31-city survey.43 Data from the NBS is considered to be more (Tens of thousands)

reliable than that of the MOHRSS, as the former is elaborated Wages

6,872 6,343 Dec. 2018 Yearly
(RMB/month)
following the international standards by the International
Minimum Wages*
2,480 2,420 Dec. 2018 Yearly
Labor Organization (ILO). Additionally, quarterly (RMB/month)

unemployment rates from the MOHRSS refers to urban Population

1,395 1,390 Dec. 2018 Yearly
(Million)
registered jobless rate: the rate of unemployment leaves out
those in search for a job in urban areas who do not have an Source: Tradingeconomics.com China Indicators, from NBS and China Ministry of Human
Resources (MOHRSS) data. * Minimum wage in Shanghai (the highest minimum wage in China).
urban registration.44
MOHRSS Ratio of Job Vacancies to Job Seekers
Since 2014, the MOHRSS publishes quarterly ratios of job
Overall China 2016 Q1 to 2019 Q1
vacancies to job seekers, to gauge labor shortages or labor
1.27 1.28
1.25
oversupply.45 Following on MOHRSS data, in Q1 2019, there 1.22 1.23 1.23
1.16
were 5.9 million job vacancies (3.3 percent increase over Q1 1.13 1.13
1.1 1.11
1.07
2018) and 4.6 million job seekers (0.3 percent decrease over 1.05

the same period last year). This results in a ratio of job

vacancies to job seekers of 1.28, signaling labor shortage.

Over the years, the ratio presents a steady upward trend. This
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
indicates that the labor market is unable to efficiently allocate 2016 2017 2018 2019

the required amount of human resources to cover all the job
openings. With every passing year this gap increases. The
pace has hastened from Q4 2017, with the ratio remaining
above the 1.20 level. At the regional level, MOHRSS data for
14
East, Central China reproduces similar labor shortages as seen
for China overall. In Western China, the ratio increases to
Source: MOHRSS based on the tracking of 90 cities. *A value > 1 indicates labor shortages
(demand greater than supply); a value < 1 means oversupply.
MOHRSS Ratio of Job Vacancies to Job Seekers
Overall China and by Region 2018 Q1 vs. 2019 Q1
2018Q1 2019Q1

1.40. Although the number of job seekers went up there by 1.4

14.1 percent over the same period last year, job demand 1.28
1.26 1.26 1.27
increased by 21.4 percent.46 1.23 1.22 1.23

Private online recruitment platform Zhaopin tracks job

vacancies and job applications from white collar professionals
across 37 major cities. In contrast with MOHRSS trends, from China East Central Western
Zhaopin’s research in Q1 2019, there was an average of 47.3
Source: MOHRSS based on the tracking of 90 cities. * A value > 1 indicates labor shortages
job applicants per job vacancy, a 10.5 percent increase over (demand greater than supply); a value < 1 means oversupply.

the first quarter of 2019.47 These percentages point directly

to oversupply, and not labor shortages as per the official data.
Zhaopin Ratio of Job Applications by Job Vacancies
Two very different snapshots from two different sources of
the country’s job market, amid concerns of whether the 47.3
economic slowdown seen in 2019 will take its toll in job 42.1
38.0
losses. 31.9 32.0

In the first half of 2019, a total of 7.4 million people were

newly employed (67 percent of the annual target), according
to the NBS. By the end of the year, it is expected that 8.3
million new graduates will enter the labor market.
2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1

Source: Competitive index by Zhaopin.com. * Number of resume applications divided by the

number of job vacancies: How many applicants on average per job vacancy published.

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5. Notes
1. Miao Han et al., “China Economy Slips to Record Low Growth",
Bloomberg.com, 15 July 2019.
2. Neil Irwin, “How the Recession of 2020 Could Happen”, The New
York Times, 17 August 2019. “China and the world. Inside the
dynamics of a changing relationship”, McKinsey Global Institute,
July 2019.
3. Information and communication technology (ICT). OECD Library.
https://www.oecd-ilibrary.org/science-and-technology/
information-and-communication-technology-ict/indicator-
group/english_04df17c2-en, accessed 27 August 2019.
4. “Investment on Fixed Assets for the First Seven Months of 2019”,
National Bureau of Statistics (NBS) Press Release, 16 August
2019.
5. “Total Retail Sales of Consumer Goods up by 7.6 percent in July
2019”, NBS Press Release, 18 August 2019.
6. “China Flash Report, Sales Volume 2019”, Marklines.com, 5
September 2019. https://www.marklines.com/en/statistics/
flash_sales/salesfig_china_2019, accessed 6 September 2019.
7. In June 2019 authorities clarified that stage-5 cars could be
resold.
8. Yilei Sun, Norihiko Shirouzu, “Behind the plunge in China auto
sales”, Reuters.com, 1 July 2019.
9. “Production of cars in China from 2009 to 2019 (in 1,000 units)”,
Statista.com, https://www.statista.com/statistics/281133/car-
production-in-china/, accessed 27 August 2019.
10. Sidney Leng, “China’s exports and imports both fell in June, as
higher US trade war tariffs blitz Chinese economy”, SCMP, 12
July 2019.
11. “China and the world. Inside the dynamics of a changing
relationship”, McKinsey Global Institute, July 2019.
12. 29 June, trade talks to restart after presidents Xi and Trump
reached a tentative truce days before the G20 Summit. 9 July,
U.S. exempts 110 Chinese products from 25 percent tariffs. 16
July, Trumps threatens tariffs on USD 325 billion of Chinese
goods. 31 July, Shanghai trade talks end with little progress
being made. 1 August, Trump says U.S. will impose 10 percent
tariffs on another USD 300 billion of Chinese goods, starting 1
September. 5 August, the U.S. Department of Treasury declares
China to be a “currency manipulator”. That same day, Chinese
companies suspend new U.S. agricultural product purchases. 13
August, U.S. delays tariffs on certain products and removes
items from the list; U.S. and China agree to talk again in two
weeks. For a detailed timeline, see https://www.china-
briefing.com/news/the-us-china-trade-war-a-timeline/, accessed
27 August 2019.
13. “China's Baoshang Bank taken over for one year due to 'serious
credit risks’”, China Daily, 24 May 2019.
14. Andrew Galbraith, “China central bank urges calm after
Baoshang takeover”, Reuters.com, 3 June 2019.
15. Karen Yeung, “China factory activity contracted in June as US
trade war tariff increase in May starts to bite”, SCMP, 1 July
2019.
16. Finbarr Bermingham, John Carter, “China’s manufacturing index
drops into negative territory in May as economic pressures
mount”, SCMP, 31 May 2019.
17. The Caixin China PMI is compiled from surveys to business
owners and supply chain managers on a range of topics,
including new orders, employment trends or delivery times. The
answers are then boiled down into one number, in a scale
between 0 and 100. A mark above 50 indicates the economy is
expanding. Below 50 suggests it is contracting.
18. See Note 16.
19. “Treasury Designates China as a Currency Manipulator”, U.S.
Department of Treasury Press Release, 5 August 2019.
20. Yawen Chen, Ryan Woo, “China producer prices fall for first
time in three years, deflation worries resurface”, Reuters.com, 9
August 2019.
21. Huileng Tan, “China’s food prices jump 9.1% in July as the
country battles African swine fever”, CNBC, 9 August 2019.
Tom Hancock, “China swine fever hits small farmers and rural
communities hard”, Financial Times, 10 July 2019.
22. “China's comprehensive relaxation of settlement restrictions”, 15
BBC China, 11 April 2019. In Chinese.
23. NBS Database. http://data.stats.gov.cn/english/easyquery.htm
?cn=C01, accessed 27 August 2019.
24. Zheng Yangpeng,“What does China’s move to relax hukou
residency curbs mean for the property sector?”, SCMP, 11 April
2019.
25. Zoey Ye Zhang, “China is Relaxing Hukou Restrictions in Small
and Medium-Sized Cities”, China-Briefing.com, 17 April 2019.
26. See Note 25.
27. Life expectancy at birth, total (1960-2017). The World Bank.
https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations
=CN, accessed 26 August 2019.
28. Viola Rothschild, “China’s pension system is not aging well”, The
Diplomat, 6 March 2019.
29. Frank Tang, “China’s state pension fund to run dry by 2035”,
SCMP, 12 April 2019.
30. Wang Feng, Yong Cai, “China Isn’t Having Enough Babies”, The
New York Times, 26 February 2019.
31. Steven Lee Myers, “China’s Looming Crisis: A Shrinking
Population”, The New York Times, 21 January 2019.
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32. See Note 29. 41. Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang;
Northeast: Liaoning, Jilin, and Heilongjiang.
33. See Note 31.
42. China Economic Indicators 2019. Tradingecononics.com.
34. See Note 29.
https://tradingeconomics.com/china/indicators, accessed 27
35. See Note 29. August 2019.

36. See Note 28. 43. “China urban unemployment rate”, NBS Press Release, 15 July
2019.
37. See Note 29.
44. Martin Hart-Landsberg, “China has an unemployment problem”,
38. The 996 working hour system gained traction both in social Monthly Review Online, 14 March 2019.
media and news outlets in China (and abroad) when, in April
2019, Jack Ma - founder of Alibaba Group - said in an internal 45. The MOHRSS samples data from around 200 public
company post in Weibo: “996 is not a problem (…) doing employment and talent service organizations. Each quarter
overtime is bliss”. Later, JD.com’s founder Richard Liu chimed in covers a varying number of cities (usually between 90 and 110).
to endorse Jack Ma words. The 996 working hour system is an The latest data available, by the time of this writing, was from
extremely polarizing subject: it is against China’s Labor Contract
the first quarter of 2019 and the number of cities sampled was
Law to demand employees to work overtime without
90.
compensation; additionally such working schedule imposes
serious hurdles on employees willing to balance personal with 46. “Analysis Market Supply and Demand. First Quarter 2019”,
professional life, an already daunting endeavor even in the MOHRSS, 24 April 2019. http://www.cjob.gov.cn/rdzx/
traditional 8:00 to 17:00 working schedule, given the pervasive
100062.jhtml, accessed 27 August 2019. In Chinese.
use of technology (email, wechat); finally, it does not take into
account health related issues (stress, fatigue, insufficient 47. “2019 Spring recruits. How much is the white collar salary?”,
reparatory sleep) that such working schedule induces, ultimately Sina.com, 17 April 2019. In Chinese.
impacting performance and productivity within the same
organizations that encourage it.

39. China has two types of hukou: agricultural and non-agricultural.

Migrant workers (农民工, nóng mín gōng) are workers whose
hukou remains in the country side but who have been working in
a non-agriculture activity for more than 6 months.
16
40. The NBS distinguishes between “Local Migrant Workers” (本地
农民工, běn dì nóng mín gōng) and “Migrant Workers who go
out” ( 外 出 农 民 工 , wài chū nóng mín gōng). Local migrant
workers are working within the villages and towns where their
hukou is; migrant workers who go out work outside of the
villages and towns where their hukou is in, either inside or
outside the province of their hukou.

41. The direct translation of 农民工 is “peasant workers”, referring

to people who have agriculture hukou but work in secondary or
tertiary related activities. However, since rural areas seldom
provide non-agricultural jobs, Chinese media uses 农民工 to
specifically refer to ‘peasant workers’ who ‘migrate’ to city areas
and do non-agricultural work.

42. A local migrant worker 本地农民工 indeed does not migrate.

Consider a Shanghainese holding a Shanghainese hukou that
happens to be an agricultural hukou (even Shanghai has rural
areas). He/she will be considered as a local migrant worker if
he/she is doing non-agricultural work in Shanghai (i.e., driving a
cab).

41. According to the NBS, Eastern region includes Beijing, Tianjin,

Hebei, Shanghai, Jiangsu, Zhejian, Fujian, Shandong, Guandong
and Hainan; Central: Shanxi, Anhui, Jianxi, Henan, Hubei;
Western: Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou,

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II Wage Developments in China Wage Growth Indicators China (%)

2012-2018. Nominal Growth

20.2
Wage guidelines National wage Minimum wage
1. National Wage Developments 17.0

14.0 13.1 12.8

The annual wage in China averaged RMB 82,461 in 2018 - 13.6
12.4
11.2
10.7
an increase of 11 percent in comparison to 2017 – according 11.6
10.2
9.9
11.9 8.9 11.0
10.0
to data from the NBS. The increase has been one p.p. above 10.1 9.5 10.1
8.5 8.6
7.8 7.6 6.4
the 10 percent forecasted by the German Chamber of
Commerce in China.1 2012 2013 2014 2015 2016 2017 2018 2019*

According to online recruitment platform Zhaopin.com, the

Source: NBS & German Chamber of Commerce in China analysis. *National wage growth
annual salary in China averaged RMB 96,000 in the first estimate. The number of provinces issuing adjustments for wage guidelines & minimum
wages varies every year.
quarter of 2019: a 5.5 percent increase in comparison with a
year ago, but a drop of 0.6 percent from the last quarter of GDP and Wage Growth (%)
2018.2 2009-2019
GDP growth Wage growth (nominal)
The German Chamber of Commerce in China estimates for
2019 project a wage increase of 9.9 percent and an average 14.4
13.3
annual compensation of RMB 90,613. Projections are based 11.6
11.9 10.1 9.5 10.1 10.0
11.0
9.9
8.9
on the current context of slower domestic growth and
10.6
9.4 9.5
inflationary pressures. 7.9 7.8 7.3 6.9 6.7 6.9 6.6 6.3

China’s per capita disposable income averaged RMB 15,294

09 10 11 12 13 14 15 16 17 18 2019*
year in the first six months of 2019, an increase of 8.8
percent YoY in nominal terms, according to preliminary
Source: NBS & German Chamber of Commerce in China analysis. *2019 GDP growth until
accounting results published by the NBS in July 2019.3 Since June. 2019 Wage growth: Estimates from the Chamber’s own analysis.
inflation in China was at 2.7 percent YoY in June 2019, the
increase in real terms on per capita disposable income was Average Wage and Wage Growth
2009-2019
17
6.1 percent. The per capita disposable income of urban
households (RMB 21,342) represented 2.7 times that of rural Average wage RMB Wage growth, nominal (in %)

households (RMB 7,778). 105,000

24%
90,000
20%
90,613
75,000
82,461

16%
60,000
12%
45,000
46,769

30,000 8%
32,244

15,000 4%
0 0%
09 10 11 12 13 14 15 16 17 18 2019*

Source: NBS & German Chamber of Commerce in China analysis. * Average wage and wage
growth: Estimates from the Chamber’s own analysis. Note: Annual wages based on 12
months; all wages are pre-tax.

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2. Provincial Wage Developments Wage Growth by Region (%)

2011-2019. Nominal Growth
The most significant wage increases took place in Central Central Northeast East China
West
China regions (Shanxi, Anhui, Jiangxi, Henan, Hubei, and 16% 14.4
Hunan). According to the latest official data available, the 11.9
11.0
12% 10.1 10.1 10.0 9.9
overall increase for Central China regions was 12.7 percent in 9.5 8.9
2018. In 2017, Central China also claimed the highest wage 8%

increase (10.7 percent). Contrary to what it might look based

on the developments for 2017 and 2018, the average salary 4%

increase in Central China during the six years from 2013 to 0%

2018 (9.5 percent) is lower than that of West (10.4 percent) 2011 2012 2013 2014 2015 2016 2017 2018 2019*
and East (9.7 percent) China regions.4
Source: NBS & German Chamber of Commerce in China analysis.* 2019 Regional wage
developments estimates.
For the third consecutive year, Northeast China (Liaoning,
Jilin, and Heilongjiang) register the lowest wage increase: 8.9
Central, North East and West China Compensation
percent, in 2018. It remains the region with the lowest
As Factor of East China’s Compensation 2011-2018
annual salaries (RMB 65,411). This is 0.70 times the average
West Central Northeast East =1
compensation in East China, which is the highest paying
region (annual salary of RMB 93,253 in 2018, and an
estimated RMB 102,324 for 2019).

0.81

0.81

0.81

0.81
0.80

0.80
0.79
0.77

0.75

0.74
0.74

0.74
0.73

0.73

0.73
0.72

0.72
0.72

0.72
0.72

0.72
0.71

0.70

0.70
Since 2011, using East China as the baseline, only West
regions have produced salary increases closing the relative
gap in compensation: from West China salaries being 0.77
times those of the East in 2011, to be 0.81 in 2018. Central
2011 2012 2013 2014 2015 2016 2017 2018
China compensation in 2011 was 0.74 times that of East
China, the same proportion as in 2018. Northeast regions Source: NBS & German Chamber of Commerce in China analysis.

have seen an increase in their compensation gap towards

East China during 2011 to 2018: the average compensation Average Wage Developments by Province (%)
18
in Northeast was 0.72 times that of the East in 2011, 2014-2019
whereas it was 0.70 times by 2018. Tibet 18.9
Yunnan 13.0
Guangxi 11.6
For an assessment of wage increases at the province level, an Guizhou 11.1

overview is provided in the graph Average Wage Developments Hainan 10.9

Hebei 10.9
by Province, which combines official data increases from 2014 Hubei 10.7
Hunan 10.5
to 2017 with projected increases for 2018 and 2019. Apart Gansu 10.4

the average increase for Tibet (addressed in detail in the 11th Guangdong 10.2
Qinghai 10.2
Edition of the Salary Report),5 from the eleven provinces with CHINA 9.9
Sichuan
increases above China’s average, six are from Western China 9.8
Shandong 9.8
(Yunnan, Guangxi, Guizhou, Gansu, Qinghai, and Tibet). The Jiangxi 9.7
Shanghai 9.6
other provinces are Hainan, Hebei, and Guangdong (which Jilin 9.5

includes Shenzhen and Guangzhou) in the East, and Hubei Zhejiang 9.4
Henan 9.4
and Hunan in Central China. Chongqing 9.3
Beijing 9.1
Tianjin 8.7
Fujian 8.6
Xinjiang 8.6
Ningxia 8.5
Heilongjiang 8.4
Jiangsu 8.4
Shaanxi 8.3
Anhui 8.0
Liaoning 7.7
Inner Mongolia 7.2
Shanxi 6.6

Source: NBS & German Chamber of Commerce in China analysis. According to data from the NBS
salary growth in Tibet in 2015 was 59.8%, due to a one-time transference of RMB 132.09 billion on
the 50th anniversary of the establishment of Tibet Autonomous Region, resulting in the region topping
the ranking of regional wage developments.

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3. Minimum Wages and Wage Guidelines Wage Levels by Province

2017-2019. Average Monthly Wages, in RMB
Wage guidelines are issued by provincial and local
Province 2017 2018* 2019* Factor**
governments, based on the economic development of the
Shanghai 10,816 11,959 13,102 1.74
regions they administer. They are not mandatory but meant
Beijing 10,975 11,987 13,080 1.73
to provide a reference for wage increases by percentage over Tibet 9,068 10,672 12,686 1.68
base salary levels.6 Although the guidelines are supposed to Tianjin 7,878 8,585 9,336 1.24

be published annually before the end of March, the reality is Zhejiang 6,729 7,401 8,100 1.07
Guangdong 6,599 7,227 7,966 1.05
that few local governments do. Publishing dates, when
Jiangsu 6,522 7,117 7,712 1.02
guidelines are formulated, are usually pushed to the second
Qinghai 6,308 6,956 7,666 1.02
half of the year. For instance, 21 out of 31 provinces issued Guizhou 5,983 6,689 7,433 0.98
wage guidelines in 2018. Of those, 14 were published in the Yunnan 5,759 6,505 7,349 0.97

second half of the year. Chongqing 5,907 6,485 7,085 0.94

Sichuan 5,785 6,387 7,015 0.93

At the time of this writing, only five provinces have issued Hainan 5,644 6,289 6,978 0.92

wage guidelines in 2019: Shanghai, and Shandong in East Ningxia 5,858 6,338 6,880 0.91
Shandong 5,673 6,252 6,865 0.91
China; Inner Mongolia, Shaanxi, and Xinjiang in West China.
Hubei 5,493 6,075 6,724 0.89
Xinjiang 5,661 6,160 6,688 0.89
For the first time, Shanghai issued recommended ranges and
Guangxi 5,318 5,953 6,641 0.88
not specific percentages, for the lower (minimum) guideline
Fujian 5,618 6,105 6,629 0.88
and the reference (average) baseline: two percent to three Gansu 5,281 5,861 6,472 0.86
percent for the minimum tranche, and five to six percent for Hunan 5,308 5,856 6,468 0.86

the average. On March 2019, Shandong province issued its Hebei 5,253 5,794 6,425 0.85
Inner
guideline of seven percent for the average reference Mongolia
5,557 5,971 6,398 0.85

Shaanxi 5,432 5,901 6,394 0.85

(identical to that of 2018) but did not release guidelines for
Anhui 5,429 5,857 6,327 0.84
the lower and upper tranches. Shaanxi kept the upper wage
Jiangxi 5,119 5,620 6,165 0.82
guideline at 12 percent (same as last year) and reduced one Jilin 5,121 5,626 6,162 0.82
p.p. its minimum guideline (from three percent to two Liaoning 5,096 5,498 5,922 0.78

percent), and 0.5 p.p. its average guideline (from 7.5 percent Shanxi 5,005 5,323 5,676 0.75
19
Heilongjiang 4,672 5,095 5,524 0.73
to seven percent).
Henan 4,625 5,008 5,481 0.73

Additionally, China has a minimum wage system. In

Source: German Chamber of Commerce in China analysis based on 2017 NBS data. *2018 and 2019 are
opposition to wage guidelines, minimum wages are estimates considering GDP growth, inflation and wage increases in the past. ** Factor represents the
ratio of regional wage to national average for 2019. Monthly wages, based on 12-months year basis; all
mandatory. Although the system has been running since wages are pre-tax.

1994, it was not enforced until 2004.

Like the wage guidelines, local governments issue minimum

wages. Those should be revised once every two years and Regional Wage Increase Guidelines 2019 (%)
should stay between 40 to 60 percent of the region’s
average monthly salaries. In reality, minimum wages fall far Province Minimum Average Maximum

behind that. In 2019, in Shanghai and Beijing, the two areas Shanghai 1 2.0 - 3.0 5.0 - 6.0 -
with the highest minimums, the minimum wages amount to Inner Mongolia 2 - 7.5 11.0
18.9 percent and 16.8 percent of the average salary - 7.0 -
Shandong 3

respectively. The closest provinces to meet such criteria were

Shaanxi 2.0 7.0 12.0
Henan, where minimum wages were 34.7 percent of the
Xinjiang 2.0 5.0 8.0
average compensation in 2019; and Heilongjiang where
Average 2.2 6.4 10.3
minimum wages were 30.4 percent of the average salary. All
provinces considered, minimum wages represent 28 percent Average 2018 4 3.2 7.6 11.8

of the minimum wage.7 Average 2017 3.0 7.8 12.2

In 2018, 15 provinces increased their minimum wages. By
August 2019, only four regions have issued minimum wage
rates this year: Beijing, Shanghai, Chongqing, and Shaanxi.
Other regions that are likely to put forward minimum wage
Source: German Chamber of Commerce in China research and analysis. Annual averages for each tranche
are calculated based on regional adjustments identified during the year. Data as of 13 August 2019. 1.No
maximum increase guideline issued for Shanghai; 2.No minimum increase guideline issued for Inner
Mongolia; 3. No maximum and minimum increase guidelines issued for Shandong; 4.The 2018 average
includes all 17 provinces that issued new guidelines that year: five of them updated after the publication of
the last year’s Labor Market and Salary Report 2018/19. Therefore, data in the table for 2018 differs slightly
from the averages presented in last year’s report.

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Minimum Wage Rates in China 2018

Last
Region Class
Increase*

A B C D E F (%) Valid since

Beijing 2,200 - - - - - 3.8 Jul 2019

Tianjin 2,050 - - - - - 4.9 Jul 2017
Hebei 1,650 1,590 1,480 1,380 - - 12.5 Jul 2016
Shanxi 1,700 1,600 1,500 1,400 - - 5.4 Oct 2017
Inner Mongolia 1,760 1,660 1,560 1,460 - - 8.1 Aug 2017
Liaoning 1,620 1,420 1,300 1,120 - - 7.6 Jan 2018
Jilin 1,780 1,680 1,580 1,480 - - 18.1 Oct 2017
Heilongjiang 1,680 1,450 1,270 - - - 15.5 Oct 2017
Shanghai 2,480 - - - - - 2.5 Apr 2019
Jiangsu 2,020 1,830 1,620 - - - 14.7 Aug 2018
Zhejiang 2,010 1,800 1,660 1,500 - - 8.4 Dec 2017
Anhui 1,550 1,380 1,280 1,180 - - 2.3 Nov 2018
Fujian 1,700 1,650 1,500 1,380 1,280 - 19.9 Jul 2017
Jiangxi 1,680 1,580 1,470 - - 10.1 Jan 2018
Shandong 1,910 1,730 1,550 - - - 5.5 Jun 2018
Henan 1,900 1,700 1,500 - - - 17.1 Oct 2018
Hubei 1,750 1,500 1,380 1,250 - - 13.2 Nov 2017
Hunan 1,580 1,430 1,280 1,130 - - 12.9 Jul 2017
Guangdong 2,150 1,720 1,550 1,410 - - 6.2 Jul 2018
Guangxi 1,680 1,450 1,300 - - - 19.8 Feb 2018
Hainan 1,670 1,570 1,520 - - - 17.8 Dec 2018
Chongqing 1,800 1,700 - - - - 20.7 Jan 2019
Sichuan 1,780 1,650 1,550 - - - 20.4 Jul 2018
Guizhou 1,680 1,570 1,470 - - - 4.9 Jul 2017
Yunnan 1,670 1,500 1,350 - - - 9.0 May 2018
Tibet 1,650 - - - - - 17.9 Jan 2018
Shaanxi 1,800 1,700 1,600 - - - 7.6 May 2019
Gansu 1,620 1,570 1,520 1,470 - - 10.8 Jun 2017
20 Qinghai 1,500 - - - - - 19.1 Jun 2017
Ningxia 1,660 1,560 1,480 - - - 12.2 Oct 2017
Xinjiang 1,820 1,620 1,540 1,460 - - 10.4 Jan 2018
Shenzhen 2,200 - - - - - 3.3 Jul 2018

Source: Provincial Human Resources and Social Security Bureaus and German Chamber of Commerce in China analysis. “Class” refers to different wage districts or jurisdictions within a
province. Local governments are responsible for setting minimum wages. *Increases are calculated as the average increases of adjustments for all categories in the region. With the
exception of Shenzhen, only provinces and province-level municipalities set minimum wage levels.

increases, since they have not done so in the past two years:
Fujian, Hunan, Gansu, Guizhou, Tianjin, Qinghai,
and Zhejiang.8

Among the regions that have introduced minimum wage

increases this year, Chongqing presents the highest increase:
20.7 percent. Minimum wages had not been updated in
Chongqing since 2016. Minimum wages in Chongqing are
established for two different groups of districts: districts in
class A have seen minimum wage increasing from RMB 1,500
/ month to RMB 1,800 / month; districts in class B have gone
from RMB 1,400 / month to RMB 1,700 / month.9

Shanghai rose its minimum wage 2.5 percent in April, from

RMB 2,420 / month to RMB 2,480 / month; Beijing
increased it by 3.8 percent, from RMB 2,120 / month to
RMB 2,200 month. As opposed to Chongqing, minimum
wages in Shanghai and Beijing were updated just a year ago.

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4. Wages by Industry and Ownership Wage Developments by Industry 2018

Ranked Based on 2018 Wages
In 2016, IT overtook finance services as the highest paying
Growth
industry in China and has remained at the top spot since Industry 2017 2018 Factor*
(%)
then. With an average monthly compensation of RMB IT 11,096 12,307 10.9 1.79
12,307 last year, IT grew 10.9 percent compared to 2017 Finance Services 10,238 10,820 5.7 1.57
and also put an additional distance with finance services’ Technical Services, R&D 8,985 10,279 14.4 1.50
compensation. Upward pressure on IT salaries remains as Utilities 7,529 8,347 10.9 1.21
China rises in becoming a global hub for technology which Culture 7,317 8,218 12.3 1.20

leads to an increasing demand for IT professionals. Healthcare 7,471 8,177 9.4 1.19

Education 6,951 7,699 10.8 1.12

The mining industry registered with 17.2 percent the most
Transport & Logistics 6,685 7,448 11.4 1.08
substantial wage increase in 2018. That is 2.4 p.p. above the
Business Services 6,783 7,096 4.6 1.03
growth experienced by the industry the previous year, and
CHINA 6,193 6,872 11.0 1.00
6.2 p.p. above the overall average increase in China in 2018
Mining 5,792 6,786 17.2 0.99
(eleven percent). As a consequence, wages in the industry
Retail & Wholesale 5,933 6,713 13.1 0.98
(RMB 6,786 / month) have practically caught up with China’s
Real Estate 5,773 6,273 8.7 0.91
average (RMB 6,872 / month). Manufacturing 5,371 6,007 11.8 0.87

Construction 4,631 5,042 8.9 0.73

The significant increases in the past two years in mining show
Water & Environment 4,352 4,723 8.5 0.69
the industry is gaining momentum. Industrial profits increased
Residential Services 4,213 4,612 9.5 0.67
by 4.2 percent YoY during the first six months of 2019,
Hospitality 3,813 4,022 5.5 0.59
against a backdrop of a 2.4 percent decrease in overall
Agriculture 3,042 3,039 -0.1 0.44
industry profits.10 Investment in fixed assets for the mining
industry grew 22.3 percent during the same period.11 China
Source: NBS. * Factor represents the ratio of INDUSTRY-specific average wage to national
approved more than RMB 45 billion worth of new coal average wage for 2018. Monthly wages, based on 12-months year basis; all wages are pre-
tax.
mining projects in 2018 after closing old coal mines to clean
up the environment. Furthermore, it produced 320.4 million
tons of coal in December 2018, the largest volume since
21
2015.11 China is also increasing mining efforts of rare earth
elements, for which it is already responsible for 71 percent of
the world’s production.13

Other relevant wage developments come from technical

services / R&D (14.4 percent increase), and retail &
wholesale (13.1 percent increase). The technical services /
R&D wage development is especially remarkable since it is
the third largest average compensation by industry in China:
RMB 10,279 / month in 2018. Despite being one of the
highest paying industries in China, wages are still growing at a
considerable pace at the technical services / R&D industry.
Similar to IT professionals, scientific researchers and technical
specialists are at the center of China’s advances in innovation
and subject to several tax exemptions. Since 2017, China
provides enterprises with a 75 percent bonus deduction for
qualifying R&D expenses, which applies as well to staff
costs.14

The most modest increases have been for transport &

logistics (4.6 percent, and average compensation of RMB
7,096 / month), hospitality services (5.5 percent, RMB 4,022
/ month), and finance services (5.7 percent, RMB 10,820 /
month – the second highest paying industry in China, after
IT). Additionally, wages in agriculture stagnated with a slight

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0.1 percent decrease and an average salary of RMB 3,039 / Average Annual Wages by Form of Ownership
2014-2019
month, the lowest in China.
SOEs LLC Shareholding Hong Kong and Macau (SAR), Taiwan
No remarkable compensation developments are recorded 120,000

with regard to ownership type. Limited liability corporations 100,000

(LLC) have the highest wage increases, with a 13.1 percent 80,000

increase in 2018. Hong Kong and Macau (SAR) and 60,000

Taiwanese firms followed, with a 12.3 percent. According to 40,000

data from the NBS, wages both at foreign companies and 20,000

state-owned enterprises (SOEs) increased by 10.3 percent; 0

and at shareholding companies by 9.7 percent. 2014 2015 2016 2017 2018 2019*

Source: NBS & German Chamber of Commerce in China analysis. Average wages in RMB.
The gap in annual compensation between shareholding and *Estimates from the Chamber’s own analysis.

SOEs, traditionally in favor of the former, has been narrowing

down. In 2014, the difference in compensation between the
two types was favorable to shareholding companies by RMB Wage Levels by Ownership in Relation to Foreign Companies
10,125. In 2018, according to data by the NBS, the 2006-2019. Foreign companies = 100
difference in compensation between SOEs and shareholding SOEs LLC Shareholding Hong Kong and Macau (SAR), Taiwan
companies had narrowed down to RMB 3,842. If wages in 110%

SOEs and shareholding companies were to continue to 100%

develop at such pace, the Chamber estimates the difference 90%

80%
could get as low as RMB 2,060 by the end of 2019.
70%

60%
In 2018 foreign-owned companies remained the highest
50%
paying (RMB 99,367 / year), followed by shareholding 40%
06 07 08 09 10 11 12 13 14 15 16 17 18 2019*
companies (RMB 93,316 / year).
Source: NBS & German Chamber of Commerce in China analysis. Average wages in RMB.
*Estimates from the Chamber’s own analysis.

22

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5. Productivity China’s Output per Worker: Overall and by Sector

RMB per Employed Person, at 2010 Prices
According to the Chamber calculations, productivity in China
Tertiary Secondary Primary Total Productivity increase (%)
increased by 6.6 percent YoY in 2018. Such productivity 160,000
140,000 18%
level is in line with the World Bank’s data for China (6.7
120,000 15%
percent). The output per employed person, used as a 100,000 12%
measure of productivity, reached RMB 93,784 in 2018 (at 80,000
9%
60,000
2010 prices).15 Most of the productivity gains came from the 40,000
6%

secondary sector (manufacturing, mining, construction), 20,000 3%

0 0%
where productivity grew nine percent in 2018. Primary 05 06 07 08 09 10 11 12 13 14 15 16 17 2018

sector followed (4.7 percent increase), and the services

sector yielded the most moderate increase in productivity Source: NBS & Chamber of Commerce in China analysis. GDP deflator (rebased, 2010=100)
has been used to deflate prices. Productivity increase refers to the percent variation in
(3.9 percent). output per worker (total) compared to the previous year.

China’s overall productivity gains have remained stable during

China’s Sources of Economic Growth (%)
the period of 2014 to 2018, with an average productivity
Contribution to GDP Growth of Capital, Labor and Total
growth of 6.7 percent. That is in contrast to the 8.5 percent Factor Productivity (TFP)
average increase in productivity for the period of 2009 to
TFP Capital input (non-IT) Capital input (IT) Labor input
2013. Were productivity to remain at the growth pace of the
10.1 4.4
last five years, China would achieve its target of RMB 23.3 18.0 2.0 5.6
1.1
120,000 per worker in 2020 (in nominal terms). 39.4
43.8 56.7

Government policies in 2017 and 2018 such as curbing on 68.3

risk lending, the clean-up in shadow banking (with the rise of 37.1
49.5
34.4
corporate defaults as a consequence), elimination of excess 8.3
1970-1980 1980-1990 1990-2000 2000-2016
industrial capacity (in steel and cement industries), and
exerting higher control on home prices, have resulted in Source: Asian Productivity Organization. Asian Productivity Databook 2018.

slower growth in the economy but also have supported

sustained productivity growth.16
China’s Productivity in an International Context 23
Over the past three decades, economic growth in China, as in GDP per Employed Person (constant 2011 PPP $)
Ranked by Productivity Factor of China’s
the rest of Asia, has been mostly fueled by capital
investments (in non-IT assets mostly). During the period of Country 2018
Factor of Increase
China’s 2017/18 (%)
2000 to 2016, 56.7 percent of China’s economic growth was
United States 114,990 3.9 2.1
contributed by capital investments (non-IT), according to data
Germany 91,358 3.1 1.8
from the 2018 Asian Productivity Databook. However, total
Japan 76,419 2.6 1.6
factor productivity (TFP) – a measure of efficient growth,
Turkey 73,147 2.5 2.5
since it accounts for the growth that comes from the
Korea, Rep. 70,802 2.4 2.4
combined use of different inputs (usually labor and capital) –
Slovak Republic 65,991 2.2 2.2
has contributed 34.4 percent of China’s growth in 2000 to Hungary 60,702 2.1 4.1
2016. Between 2005 and 2010, TFP accounted for 40 Poland 60,538 2.1 3.5
percent of China’s GDP growth, whereas from 2010 to 2016 Malaysia 58,687 2.0 3.1
TFP contributed 27 percent.17 GDP growth is increasingly Romania 55,054 1.9 4.9

dependent on capital investment, but the pace at which the Russian Federation 53,012 1.8 2.3

growth comes has been declining. Bulgaria 42,994 1.5 3.5

Belarus 35,758 1.2 4.2

Labor productivity has contributed 4.4 percent of China’s China 29,499 1.0 6.7
GDP growth during 2000 to 2016. The raising quantity of Indonesia 24,849 0.8 3.8
the labor force ended in 2012 when the ratio of the working- Philippines 19,918 0.7 4.2
age population to the total population peaked. The pace of India 18,565 0.6 5.8
improvement in the quality of the labor force has also Vietnam 11,142 0.4 5.6
slowed: as the Chinese labor force’s education and skills
expanded from the 70s to the 90s, further enhancements in Source: World Bank Data. Purchasing power parity (PPP) GDP is GDP converted to 2011
constant international dollars using PPP rates. An international dollar has the same
labor’s capabilities are becoming marginal.18 Because of a purchasing power over GDP that a U.S. dollar has in the United States.

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shrinking labor force, and the already high rate of China’s Productivity in an International Context
employment, it is improbable that future growth comes from Annual Productivity Growth (%)

labor input (unless the retirement age is raised).

China India Vietnam U.S. Germany Japan

To ensure sustainable growth, data points to the need to 12%

improve the efficiency of capital allocation, and to a better 10%

6.7
combination of inputs (total factor productivity) that can only 8%
5.8
come from further innovation.19 6%
5.6
4%
2.1 1.8
According to the World Intellectual Property Organization’s 2%
1.6
(WIPO) Global Innovation Index, China ranked the 14th most 0%

innovative economy (from a pool of nearly 130 economies -2%

surveyed) in 2019, up from 17th in 2018. It remains the 2010 2011 2012 2013 2014 2015 2016 2017 2018

highest ranked in WIPO index in patents by origin,

Source: World Bank Data. The annual increase in productivity has been calculated using
trademarks by origin, industrial designs, and high-tech net GDP per Employed Person (constant 2011 PPP $). Purchasing power parity (PPP) GDP is
GDP converted to 2011 constant international dollars using PPP rates. An international
exports, among others.20 Still, there has been little impact of dollar has the same purchasing power over GDP that a U.S. dollar has in the United States.

patents on productivity gains: most patents are design or

utility patents (improvements over existing products).
Besides, a high number of patents is not associated with high
utilization rates (not licensed to commercial partners).21

China’s productivity growth, in an international context,

shows remarkable performance. According to World Bank
data, the increase in 2018 for China is the highest among its
neighbors and surpasses that of developed economies. The
world’s second-largest economy, China’s productivity growth
exceeds that of the U.S. (the largest economy), Japan (the
world’s third), and Germany (the world’s fourth largest
economy).
24
Naturally, the actual output (GDP) per employed person of
China is small: USD 29,499 at constant 2011 purchasing
parity dollars (PPP $), one-fourth of that of the U.S. or about
one-third of Germany’s. However, China’s output is higher
than that of other developing economies in the region (e.g.
India, Philippines, and Vietnam).

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6. Notes 1. the cities and counties in the province to decide which “class” is
most suitable for them. A detailed account of cities adhering to a
1. The Chamber estimated an annual average wage of RMB 81,804 specific “class” can be found here: https://www.china-
in 2018. See German Chamber of Commerce in China Labor briefing.com/news/minimum-wages-china-2019/, accessed 27
Market & Salary Report 2018/19, September 2018, page 12. August 2019.

2. “Zhaopin: China’s demand and supply of white collar 10. "Industrial Profits decreased 2.4 percent in the First Six Months
professionals”, TopHR.net, 18 April 2019. See http://www.tophr. of 2019”, National Bureau of Statistics (NBS) Press Release, 31
net/news/index.asp?id=20935, accessed 27 August 2019. In July 2019.
Chinese.
11. “Investment in Fixed Assets for the First Six Months of 2019”,
3. Disposable personal income is the money households have NBS Press Release, 17 July 2019.
available after income taxes have been deducted, and subsidies
12. Meng Meng, Dominique Patton, “China's coal output hits highest
added. To see the latest official data on disposable income in
in over 3 years as mines start up”, Reuters.com, 21 July 2019.
China, as of August 2019, visit ww.stats.gov.cn/english/
PressRelease/201907/t20190715_1676034.html, accessed 27 13. “Will Beijing weaponize its rare earth supply in the U.S.-China
August 2019. trade war?”, SCMP, 28 June 2019.

4. Provinces in the West region, according to the NBS classification:
Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan,
Tibet, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang. East
regions: Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian,
Shandong, Guangdong, Hainan.
5. In 2015 Tibet presented a wage increase of 59.8 percent
compared to 2014. That year, in commemoration of the 50th
anniversary establishment of the Tibet Autonomous Region, the
central government transferred RMB 132.09 billion to the region
(higher than the actual GDP of Tibet that year). Many of the
transferred payments were added directly to average wages, in
the form of subsidies or aid to ethnic minorities. With Tibet’s
fairly small population base (3.3 million) the grants translated into
a significant boost in the average wage.
14. Bing Yang, Benjamin Lu, Liang Wu, “R&D 2.0: Taking tax
incentives to the next level in China”, Internationaltaxreview.com,
10 December 2018.
15. China’s GDP for 2018 was RMB 90 trillion, based on the current
preliminary accounting results. The employed population that
year totaled 775.86 million. As a measure of labor productivity,
the Chamber has used the total output of the economy divided
by the total number of workers. That results in productivity of
RMB 116,040, at 2018 prices. To allow for comparisons across
time, we use the GDP deflator with 2010 as a base year to
convert prices: where 2010 = 100 and 2018 = 123.73.
Therefore, the output per worker in 2018 was RMB 93,784 at
2010 prices, a 6.6 percent increase compared with labor 25
productivity in 2017: RMB 87,958, at 2010 prices.

6. “China’s Enterprise Salary Guidelines: Useful Roadmap or Glaring 16. Kevin Hamlin, Enda Curran, “The Good News Hidden in China’s
Misdirection?”, China-Briefing.com, 14 September 2016. Slowing Economy”, Bloomberg.com, 20 November 2018.

7. To calculate the ratio minimum wage to average wage per 17. “2018 Asian Productivity Databook”, Asian Productivity
province, we have divided the minimum wage by the average Organization, 2018. See pages 62, 67, and 69. https://www.apo-
wage in the province. Since official data for provincial wages has tokyo.org/publications/wp-content/uploads/sites/5/APO-
not yet been published, the Chamber used its own estimates for Productivity-Databook-2018.pdf, accessed 27 August 2019.
2019. For example, in Beijing the minimum wage stands at RMB
2,200 as of July 2019, and the estimate average wage in Beijing is 18. Yuwa Hedrick-Wong, “The Reality Of China's Economic
RMB 13,080 / month in 2019. Therefore, the minimum wage in Slowdown”, Forbes.com, 23 August 2018.
Beijing amounts to 16.8 percent of the average wage. When a
19. “China Economic Survey”, OECD, April 2019. See pages 41-42.
province presents different minimum wages (i.e., Hebei has four
https://www.oecd.org/economy/surveys/China-2019-OECD-
different tranches), the largest minimum wage has been used for
economic-survey-overview.pdf, accessed 27 August 2019.
the calculations.
20. “Global Innovation Index 2019. Key Findings”, World Intellectual
8. Alexander Chipman, Qian Zhou, “Minimum Wages in China
Property Organization (WIPO), 2019. See page 6.
2019”, China-Briefing.com, 13 June 2019.
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019_ke
9. China does not have a unified minimum wage for the entire yfindings.pdf, accessed 27 August 2019.
nation. Since living standards vary greatly, local governments set
21. See Note 19. Page 44.
their own minimum wages. Provincial governments set out
multiple wage “classes” for the region, and each city and county
within the province chooses the appropriate minimum wage level
based on local economic conditions. For example, Zhejiang sets
four minimum wage “classes” (A, B, C, and D) but then it is up for

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III General Survey Results Expected Wage Growth Development at German

Companies in China (%) Nominal Growth

1. Expected Wage Developments at German 10.20

Chamber Companies 8.90 8.80

8.10
After last year’s mild uptick, in what now looks in hindsight 7.10

like a temporary deviation, the expected wage increase 6.23

5.90 5.99
5.53
returns to its descending path that has been a trademark

2012

2013

2014

2015

2016

2017

2018

2019

2020
feature since measurements started in 2012.

According to this edition’s contribution of 483 member

Note: Wage growth is obtained as the average of the expected salary increases for all
companies of the German Chamber of Commerce in China, positions surveyed.

the expected wage increase for 2020 is 5.53 percent, 0.46

p.p. below the projected growth for 2019.
Wage Growth Indicators (%)
In a market context characterized by high competition, lower German companies Wage National Minimum
expected wage growth guidelines wage wage
domestic and global growth, growing inflation, the RMB 23%

depreciation, trade frictions, and a hard push for 20%

organizational transformation towards digitalization, the 5.53 17%

percent is read as a balancing act. The expected salary 14%

increases from 2018 to 2020 experienced a growth 11%

slowdown at an average of 0.23 p.p.; whereas in the period
8%
2015 to 2017 the deceleration averaged 0.86 p.p. This
5%
development suggests that compensation adjustments are 2012 2013 2014 2015 2016 2017 2018 2019* 2020
reaching their adaption limits. In recent years, the expected
Source: German Chamber of Commerce in China analysis.*National wage growth:
wage increases move in conjunction with China's GDP estimate.
performance.

26 Dissecting the overall 5.53 percent by industry, company GDP, Consumer Price Index and Wage Growth (%)
size, and city tier offers additional insights (a regional 2005-2020
segmentation will be presented in the next section). German companies expected wage growth GDP National wage Consumer prices

21%
The most noticeable development is for the automotive
18%
industry, on account of both the weight it carries on the
15%
overall sample and the extent of its slowdown. Companies in 12%

the automotive sector represent 17 percent of this year’s 9%

contributions. According to this edition’s results, the 6%

projected 5.26 percent wage increase in the automotive 3%

industry for 2020 represents a forecast that is 1.37 p.p. 0%

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2020
below that of 2019. In section 1. Growth Developments in the -3%

first chapter, we presented information about the recent Source: German Chamber of Commerce in China analysis. 2019 Consumer inflation: year-
on-year increase in July (2.8 percent). GDP growth: 6.3 percent in the first semester of
weak evolution of the industry (units sold, and units 2019; six percent in 2020, as per latest International Monetary Fund (IMF) forecast in
June 2019.
produced). From the survey itself, there are additional hints
to how the industry currently sees wage and productivity
developments: 55.56 percent of automotive companies
consider it likely that productivity gains will keep up with
wage increases, the third-lowest among the six industries
measured (see section 6. Productivity later on in this chapter).

In stark contrast to automotive, machinery / industrial

equipment (33.54 percent of the overall sample) barely
moved from its projected wage increase last year. The
expected wage increase for 2020, 5.84 percent, is only

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Expected Wage Increases by Industry (%) 0.05 p.p. below that of the previous year. However, the
2019 2020 2020 China average: 5.53 ability to stick to projections is not a given: the effective
wage increase declared in 2019 has been 6.35 percent for

6.63
6.14
6.04

5.90

5.89
5.84
the machinery / industrial equipment industry, 0.46 p.p.

5.81

5.80
5.79
5.56

5.27

5.26

5.26
5.25

4.87
4.84

above the intended growth projected in the previous edition

(see section 3. Effective Wage Developments in this chapter).

Only two industries produce expected wage increases above

their expectations from last year’s edition. The most
Machinery /

Consumer
Automotive
Chemicals

Equipment

Supplies
Industrial

Medical

Products

Goods
Consulting /

Plastic / Metal

Electronics
Legal Svces.

notorious is consulting / legal services: its forecast increase

for 2020, at 6.04 percent, is 1.20 p.p. above the expectations
for 2019. Much more moderate is the second acceleration,
Note: only industries with at least 10 different companies and more than 100 data points that of the chemicals industry, with a 5.90 percent expected
at the variable “Expected Wage Increase” at both this and the past edition.
wage increase (0.34 p.p. above the previous year). These two
industries are again back at wage growth levels that are very
Expected Wage Increases by City Tier (%)
similar to those they reported in 2017 (6.06 percent for
2019 2020 2020 China average: 5.53
consulting / legal services; 5.81 for chemicals).

6.17 By city tiers, it is in tier-2 where the slowdown is more

6.01
5.77 pronounced. They project a wage increase in 2020 of 5.30

5.30 5.35 percent, in comparison with last year’s report of 6.17

5.27
percent. More moderate in their adjusted projection for
2020, tier-1 cities estimate 5.77 percent, 0.24 p.p. below
their expectation for 2019. Finally, tier-3 cities do not
anticipate major changes, with a forecast 5.27 percent
Tier 1 Tier 2 Tier 3
increase that is only 0.08 p.p. below that of last year.

Based on company size (by number of employees), in a

Expected Wage Increases by Company Size (%) context of decreasing salaries, smaller companies (less than
50 employees) present an expected wage increase of 5.83 27
Company Size by Number of Employees
percent. Thus, they are committed to sustaining the
2019 2020 2020 China average: 5.53
anticipated wage growth they had for 2019 (5.87 percent).
6.07
5.99
5.87 On the other hand, the downward revision of expected wage
5.83
increases is most acute at the biggest companies (more than
5.60
250 employees), putting forward a wage increase of 5.32
5.32
percent in 2020, 0.75 p.p. below their projection last year.

<50 50-250 >250

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Expected Regional Wage Increases

2. Regional Wage Developments
2020 China average: 5.53 2019 2020

At the regional level, the slowdown is more pronounced in

6.74

6.63
East China, the region that showed the highest expected

6.42

6.29

6.09
6.06

6.04

5.94
5.82
5.80
5.75

5.75
5.57

5.57
increases last year. Decreases there range from the relatively

5.55
5.35

5.09
5.04
4.91
4.90
moderate 0.49 p.p. deacceleration observed in Shanghai, and
Other Yangtze River Delta (Other YRD), to the more
pronounced reduction in Taicang & Kunshan, and Suzhou:
1.51 p.p. and 1.14 p.p. below their respective expected
increases for 2019. They also represent the highest decreases Shanghai TAI/KUN Beijing Other North Guangzhou

Suzhou
gauged in this edition China-wide. Other YRD Tianjin Shenzhen Other PRD

In North China, evolution within the different regions varies in
direction. Beijing predicts a 5.82 percent wage increase next
year, in the vicinity of the 5.75 percent expected for 2019.
Tianjin produces an expected increase of 5.35 percent in
TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
Other Pearl River Delta areas.
Expected Regional Wage Increases: Production Workers (%)
2020 China Production Workers average: 5.60 2019 2020

2020, 0.31 p.p. above 2019’s expectation. With such

7.44
expected increases, both Beijing and Tianjin recover from the

6.74
6.47
6.47

6.42
6.29

6.18
slowdown experienced in their respective evolution the

5.98

5.92
5.91

5.83

5.77
5.71
5.66

5.65
5.60
5.50

5.22
5.20
4.91
previous year. However, Other North continues to
deaccelerate: with an expected wage increase of 5.09
percent, conceding 0.48 p.p. to its 2019’s 5.57 percent mark
– which in turn was already 0.20 p.p. below its expected Shanghai TAI/KUN Beijing Other North Guangzhou

increase for 2018. Suzhou Other YRD Tianjin Shenzhen Other PRD

TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD: Other
Similar to North China, the expected wage increases in the Pearl River Delta areas. Production workers: Blue collar, operator, shift leader, supervisor and
plant/production manager.
largest municipalities in South China show acceleration.
Shenzhen, with an expected increase of 6.74 percent, and
Expected Regional Wage Increases: Junior Positions (%)
28 Guangzhou with 6.63 percent, present the highest increases 2020 China Junior Positions average: 5.78 2019 2020
recorded in this edition at the regional level. For Shenzhen,
such a mark represents a gain of 0.80 p.p. over last year’s 7.82

7.43
expectation. For Guangzhou, it is the second year in a row
6.77

6.66
6.38

6.37
6.25

6.10

6.09

6.05
5.99
5.87
5.82

5.76
that wages continue to accelerate: 0.54 p.p. above the
5.44

5.36
5.26

5.15
4.96
4.74

expected increase for 2019.

The evolution of the regions’ expected wage increases, both

in terms of direction and intensity, remains consistent across Shanghai TAI/KUN Beijing Other North Guangzhou
different levels of seniority as well as at the production Suzhou Other YRD Tianjin Shenzhen Other PRD
workers level. Thus, when a region presents an expected
TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
wage increase for next year that is above (or below) that of Other Pearl River Delta areas.

the previous one, a similar evolution can mostly be observed

at any given level of seniority within that particular region. Expected Regional Wage Increases: Mid-Level Positions (%)
2020 China Mid-level Positions average: 5.63 2019 2020
There are, however, a few exceptions to this. The most
7.15

notable being that of senior management roles: they are to

6.59
6.56

6.36
6.20

6.17
6.13
6.11

5.97

5.94
5.77

see higher expected wage increases than those registered last

5.69

5.63
5.59

5.56
5.33
5.28

5.21

5.17
4.93

year across all regions, except in Taicang & Kunshan, and

Other North, where expected wages will slow down following
the general evolution of these two regions.

In Beijing, although the expected wage increase for next year Shanghai TAI/KUN Beijing Other North Guangzhou

Suzhou Other YRD Tianjin Shenzhen Other PRD

is just 0.07 p.p. above that of 2019, the evolution within the
region varies depending on whether the focus is on mid-level
TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
professionals and production workers (0.38 p.p. and 0.32 p.p. Other Pearl River Delta areas.

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Expected Regional Wage Increases: Senior Positions (%) decrease respectively) or in junior and senior professionals
2020 China Senior Positions average: 5.33 2019 2020 (0.22 p.p. and 0.18 p.p increase respectively). In Shenzhen,
despite the pronounced wage acceleration for the region,
production workers’ wage increase drops by 1.84 p.p., to 5.60
percent. Finally, in Other North expected wage increase for
6.42

6.20
6.16
6.15

5.95
5.91
5.89

5.76

5.70
5.67
5.62

5.59
5.58 production workers in 2020 remains mostly unchanged (a rise
5.37

5.29
5.12

5.12
4.83
4.70

4.44

of 0.02 p.p.) in a context where all the other seniority levels,

including those of senior management, show a slowdown in
expected wage increases for next year.
Shanghai TAI/KUN Beijing Other North Guangzhou

Suzhou Other YRD Tianjin Shenzhen Other PRD

TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
Other Pearl River Delta areas.

Expected Regional Wage Increases: Senior Management (%)

2020 China Sr. Mgt. Positions average: 4.80 2019 2020
7.44

6.64
5.91

5.59

5.19
5.14
5.10

5.00

5.00

4.82

4.71
4.60
4.49

4.38
4.07

4.04

4.00
3.83
3.60
3.53

Shanghai TAI/KUN Beijing Other North Guangzhou

Suzhou Other YRD Tianjin Shenzhen* Other PRD

TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
Other Pearl River Delta areas. Senior Management: combined results from positions CEO
/ GM and Deputy GM/ Branch Manager. *Data from Shenzhen: only 9 observations.

Evolution of Expected Regional Wage Increases

29
By Production Workers and Level of Seniority. Data in p.p.*
Production Workers

Senior Professionals

Senior Management
Junior Professionals

Professionals
Mid-Level
ALL

Shanghai -0.49 -0.81 -0.56 -0.34 -0.52 0.11

Suzhou -1.14 -0.79 -1.51 -1.27 -1.21 0.31

Taicang &
-1.51 -1.56 -1.51 -1.28 -1.71 -1.57
Kunshan

Other YRD -0.49 -0.20 -0.27 -0.67 -0.80 0.14

Beijing 0.07 -0.32 0.22 -0.38 0.18 1.87

Tianjin 0.31 0.20 0.48 0.12 0.29 1.40

Other North -0.48 0.02 -0.84 -0.46 -0.47 -0.99

Shenzhen 0.80 -1.84 1.77 1.02 0.87 1.85

Guangzhou 0.54 0.18 0.77 0.42 0.25 1.45

Other PRD -0.20 -0.15 -0.40 -0.38 -0.03 0.71

*Difference between the expected 2020 and 2019 wage increases for, in p.p.

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3. Effective Wage Developments Expected and Effective Wage Increases 2019 (%)

5.99 5.87
As a new addition to the Labor Market & Salary Report, the
effective wage increases for 2019 reported in this 12th
Edition are compared against the expected wage increases for
2019 as gauged in the previous 11th Edition.

Before addressing such comparison, there is a positive (direct) Expected Effective

relationship between the effective wage increases reported in
2019, and the expected wage increases companies report for Note: The forecast increase for a given year is obtained from the previous’ year survey
edition via the variable “Expected salary change for next year”. The effective increase for
2020. In particular, the correlation coefficient r between a given year is obtained at that year’s edition, through the variable “Actual salary change”.

these two data series is +0.60, signaling a moderate to a

strong relationship.1 Expected and Effective Wage Increases 2019
By Industry (%)
When companies project their expected wage increases for
Effective Expected
next year, such expectations are mediated by the recollection
Consulting / Legal 6.21
of their most recent wage developments. Having that in mind, Services 4.84
the comparisons that follow in this section can be better
6.32
understood and put into context. Chemicals
5.56

Overall, the 5.87 percent effective increase reported this

Machinery / 6.35
edition does not drift that much away from the 5.99 percent Industrial Equipment 5.89
expected increase reported last year. Moreover, German
6.10
companies in China have managed to reduce by 0.12 p.p. Plastic / Metal
Products 5.79
their initial estimate, with the corresponding financial savings
this entails. 6.34
Medical Supplies
6.14
However, this is only at the aggregate level. A closer look by
5.41
industry reveals that only automotive and consumer goods Electronics
30 deliver effective wage increases below the initial
5.26

expectation.2 Whereas in 2018, automotive companies 5.87

ALL
anticipated a wage increase of 6.63 percent, data from this 5.99

year points to an effective wage increase of 5.30 percent 5.30

Automotive
(and an expected 5.26 increase in 2020). Consumer goods 6.63
companies report an effective increase in 2019 of 4.02
4.02
percent, 1.78 p.p. below the expectation from last year. Consumer Goods
5.80

Among industries presenting effective wage increases above

the initial expectation, consulting / legal services, and
chemicals are the most notable cases. The former delivered
an effective 6.21 percent increase, much higher than the
expected 4.80 percent. As already exposed in the first section
of this chapter, the expected wage increase for 2020 has
been recalibrated to 6.04 percent in consulting / legal
services, more in accordance to the actual evolution
experienced in 2019. Chemicals industry aimed at an increase
of 5.56 percent, but its effective wage increase turned out to
be 6.32 percent (0.77 p.p. above the initial forecast). For
2020, it projects a 5.90 percent increase.
To close on industry comparisons, machinery / industrial
equipment delivering an effective 6.35 percent wage increase
that is 0.46 p.p. above that of the initial expectation, keeps a
projection for 2020 that remains rooted in that expectation: if
Note: Only illustrated industries with at least 10 companies and 100 observations for two
variables “Expected salary change for next year” and “Total cost per employee” in this
edition.
last year’s expected wage increase was 5.89 percent, in this
edition the forecast is 5.84 percent for 2020.
Producing effective wage increases below the initial
expectation, seems to be a regional phenomenon. More
precisely, an East China phenomenon: Taicang and Kunshan
yield an effective increase that is 0.84 p.p. below its last year
expectation; Shanghai delivers an effective 5.65 percent
increase, 0.41 p.p. lower than initially anticipated; Other YRD,
an effective increase of 0.15 p.p. below its last year forecast.
Beyond eastern China, the only region where the pattern
repeats is in Other North: a 5.07 percent effective increase,

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0.50 p.p. below the expected wage increase recorded last Expected and Effective Regional Wage Increases (%)
year. Expected Effective 2019 Effective China average: 5.87

Beijing and Tianjin, as well as Shenzhen and Guangzhou, all

7.46
report effective wage increases in 2019 above their

7.25
6.42

6.38
6.29
6.14
respective expected increases as measured last year.

6.09
6.08
6.06

6.04
6.02

5.94
5.75

5.75
5.74
5.65

5.58

5.57
5.07
5.04
Variations range from the 0.63 p.p. that Beijing delivered on
top of its 5.75 percent expected wage increase, up to the
1.52 p.p. that Shenzhen added to its initial forecast.

Only Suzhou, in East China, and Other Pearl River Delta areas Shanghai TAI/KUN Beijing Other North Guangzhou

(Other PRD), in the South and Southwest, have sustained Suzhou Other YRD Tianjin Shenzhen Other PRD

effective wage increases at the same level as they were TAI / KUN: Taicang & Kunshan; Other YRD: Other Yangtze River Delta areas; Other PRD:
charted in last year’s edition. Other Pearl River Delta areas.

When it comes to comparing expected and effective wage

increases by city tier and company size, one of the most Expected and Effective Wage Increases
noticeable comparisons comes from the latter. The largest By City Tier and Company Size (%)
companies (more than 250 employees) forecasted a 6.07
Expected Effective 2019 Effective China average: 5.87
percent wage increase for 2019 and ended up delivering an
actual increase of 5.41 percent (0.66 p.p. below the initial
expectation); on the other hand, smaller sized companies,

6.22
6.17

6.16

6.07
6.01
6.00

5.99
especially those with less than 50 employees, ended up with

5.87
5.79

5.63
effective wage increases above the initial estimates.

5.41
To conclude with the comparisons, the last one is among 5.35
differences at the specific role level. Most of the 39 positions
surveyed in this edition register effective wage increases that Tier 1 Tier 2 Tier 3 Less 50 50-250 More 250

are below the initial expectation, though with different

degrees of intensity. There are only a handful of exceptions 31
recording higher effective than expected wages: junior and significant.
senior admin professionals, mid-level sales professionals,
junior project manager / consultant professionals, deputy GM
/ branch manager, and CEO / GM / managing director.

To explain these results, a reasonable assumption would be

that the higher the level of seniority, the higher the
bargaining power in wage negotiations. In 2019, where the
effective increases are below the expected ones, this would
translate in senior roles’ effective wage increases falling less
than average in comparison with the wage developments of
mid-management and lower roles, or even in some cases
resulting in effective wage increases above the initial
expectations.

To test such assumption a score was assigned to each level of

seniority: blue-collar, operator, shift leader, IT staff, legal staff,
and junior professionals, were given a weight of 1; production
supervisor, and mid-level professionals, 2; senior
professionals, legal and IT managers, 3; production / plant
manager, 4; senior management, 5. The weights of each
position were then compared against the value of the
individual differences, to look for correlation. The actual
coefficient r was 0.29, suggesting only a weak (positive)
relationship, not strong enough to conclude the association is

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Expected and Effective Wage Increases, 2019

By Position

Seniority Index Functional Area Position Expected (%) Effective (%) Difference (p.p.)*

1 Production Workers Blue Collar 6.25 5.86 -0.39

1 Production Workers Operator 6.47 5.83 -0.64
1 Production Workers Shift Leader 6.35 5.76 -0.60
2 Production Workers Production Supervisor 6.10 5.91 -0.19
3 Production Workers Production / Plant Manager 5.75 5.75 0.00
1 Admin Junior Admin 6.11 6.24 0.13
2 Admin Mid-Level Admin 6.06 5.97 -0.09
3 Admin Senior Admin 5.31 5.73 0.42
1 Sales Junior Sales 6.27 6.31 0.04
2 Sales Mid-level Sales 6.03 6.22 0.19
3 Sales Senior Sales 5.47 5.45 -0.01
1 Purchasing Junior Purchasing 6.38 5.68 -0.70
2 Purchasing Mid-Level Purchasing 5.99 5.60 -0.39
3 Purchasing Senior Purchasing 6.04 5.89 -0.15
1 Finance Junior Finance 6.34 6.33 -0.01
2 Finance Mid-Level Finance 6.01 6.00 -0.01
3 Finance Senior Finance 5.74 5.73 -0.02
1 HR Junior HR 6.25 6.14 -0.11
2 HR Mid-Level HR 6.10 5.98 -0.11
3 HR Senior HR 6.14 5.93 -0.21
1 Quality Junior Quality 6.09 6.05 -0.04
2 Quality Mid-Level Quality 6.12 5.76 -0.37
3 Quality Senior Quality 5.80 5.54 -0.25
1 Engineering / R&D Junior Engineer / R&D 6.65 6.65 0.00
2 Engineering / R&D Mid-Level Engineer / R&D 6.57 6.33 -0.24
3 Engineering / R&D Senior Engineer / R&D 6.42 6.14 -0.28
1 Logistics Junior Logistics 5.81 5.60 -0.21
2 Logistics Mid-Level Logistics 5.96 5.92 -0.04
32
3 Logistics Senior Logistics 6.14 5.89 -0.25
1 Project Mgt. / Consultant Junior PM / Consultant 6.48 7.06 0.58
2 Project Mgt. / Consultant Mid-Level PM / Consultant 6.25 6.06 -0.19
3 Project Mgt. / Consultant Senior PM / Consultant 5.95 5.58 -0.37
5 Senior Management Deputy GM / Branch Manager 5.00 5.13 0.13
5 Senior Management CEO / GM / Managing Director 4.30 4.82 0.52
3 Specialists IT Manager 5.97 5.83 -0.13
1 Specialists IT Staff 6.13 6.09 -0.05
1 Specialists Legal Staff 6.00 5.59 -0.41
3 Specialists Legal Manager 5.82 5.49 -0.33
None assigned Specialists Driver 5.53 5.17 -0.36
ALL 5.99 5.87 -0.12

* Difference effective wage increase minus expected wage increase (in percentage points). When the difference falls within the interval [-0.05, +0.05] it has been highlighted .
When the difference is > 0.05, the value has been highlighted . Finally, when the difference is < -0.05, the value has been highlighted .

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4. Wage Levels Wages at Regional Level in China

Total Cost per Employee / Month. In Thousand RMB
In 2019, the total cost per employee (TCE) at member Median Mean
companies of the German Chamber of Commerce in China

29.7
28.1
yields a median value of RMB 15,000 / month, RMB 680

23.8
23.6

23.2
above last year's median. If the comparison is made using the

21.7

21.4
20.7

19.9

19.7
19.1
19.0
mean (average) the average TCE is RMB 23,569 / month in

16.0
15.0

15.0

14.8
14.0

14.0
13.0

12.9
2019, versus the RMB 22,775 / month recorded last year.

11.2

9.8
The main goal of this section is not to run comparisons
CHINA Shanghai TAI/KUN Beijing Other North Guangzhou
between the median and average TCE recorded, but rather to
Suzhou Other YRD Tianjin Shenzhen Other PRD
lay out how does TCE move along the different categories of
the most common segmentation variables that are available TAI / KUN: Taicang and Kunshan; Other YRD: Other Yangtze River Delta areas; Other
PRD: Other Pearl River Delta areas.
from the survey. The median will be used as the reference
value for comparisons. As in previous editions, introducing
Comparison of Wages at Industry Level
the median and average compensation levels segmented by
Total Cost per Employee / Month. In Thousand RMB. Ranking by
regions exposes the degree to which TCE varies among Median Values Median Mean
German companies in China. More striking are the differences
when looking at the medians, since they are less affected by IT / 26.0
extreme values and, therefore, represent a more reliable Telecommunications 36.3

measure of centrality than averages. Consulting / Legal 21.8

Services 34.2
At the regional level, compensation in South China (Shenzhen, 20.0
Logistics
Other PRD), as well as Other North, are the lowest recorded 29.3

TCEs in this edition. Guangzhou, Taicang & Kunshan, and 18.0

Medical Supplies
27.9
Tianjin reach values close to China’s median TCE of RMB
15.4
15,000 / month; Beijing and Shanghai remain at a much Chemicals
26.2
higher level as the highest paying locations. 15.0
CHINA
23.6
Only Beijing, Shanghathe level as i, and Tianjin present – 33
15.0
same as it happened last year - median TCE values that are Automotive
23.2
above China's total value. In 2018, Beijing and Shanghai Machinery / 15.0
shared the top spot in compensation with a median of RMB Industrial Equipment 22.9

18,000 / month. However, in 2019, Beijing's compensation Plastic / Metal 13.2

Products 22.1
overtakes Shanghai’s with RMB 21,373 compared to RMB
13.0
19,000. Tianjin, on the other hand, presents a median TCE of Consumer Goods
22.4
RMB 16,000 that is only slightly above China's total median.
12.3
Electronics
18.8
The difference between the median TCE for the highest and
lowest paying locations, Beijing and Other Pearl River Delta Note: Only industries with at least 10 companies and 100 observations when combining
all data points collected for the 39 different positions measured in the survey.
(Other PRD) areas respectively, is RMB 9,778.63. That is, the
TCE at Other PRD is only 45.9 percent that of Beijing.
Production Workers, Level of Seniority & Senior Management
Such a range of variation is not unique to regional analysis. At Total Cost per Employee / Month. In Thousand RMB
the industry level, a similar scale is observed between the
Median Mean
median TCE of the highest and lowest paying industries to
122.0

that observed for regions. It should be noted that in this

107.2

section, results are presented only for industries with at least

79.9
68.8

100 observations collected on the variable “Total Cost per

33.9

Employee” that come from minimum ten different member

30.0
23.6

16.3
15.3
15.0

15.0

14.5
10.1
9.0

companies. In this year’s edition, IT / telecommunications,

which accounts for 2.90 percent of all contributions, is the
CHINA Production Junior Mid-Level Senior Deputy CEO/GM
industry with the highest median TCE (RMB 26,000 / month), Workers GM/BM
a compensation level that is 1.73 times that of China’s TCE.

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Production Workers: Break Down Individual Positions At the other end, there is electronics with a median TCE of
Total Cost per Employee / Month. In Thousand RMB RMB 12,300 / month, and 5.80 percent of the sample. The
Median Mean electronics median TCE amounts to 47.2 percent of the IT /
telecommunications.

36.1
34.5
Chemicals (6 percent of contributions), automotive (17
23.6

percent), and machinery / industrial equipment (33.5 percent)

16.4
15.3
15.0
15.0

15.0
present a median compensation in the vicinity of China’s TCE

10.7
9.8
7.7 RMB 15,000 / month: the latter two median’s TCE is RMB
7.1
6.5

6.8

15,000 / month, whereas for chemicals it is RMB 15,390 /

month.
CHINA Production Blue Collar Operator Shift Leader Production Production /
Workers Supervisor Plant
Manager A third angle from which to analyze differences in
compensation is by the level of seniority and production-
related positions. It should not come as a surprise that the
Comparison of Wages by Company Size (nº of Employees) higher the seniority level, the higher the salary. Here it is
Total Cost per Employee / Month. In Thousand RMB interesting to look at the differences between the median
Median Mean and average TCE values. The highest gaps between these

24.4
two metrics are for the roles Deputy GM / Branch Manager
23.6 23.2 23.7
role RMB 11,119 (between an average TCE RMB 79,905 /
month and median RMB 68,787 / month); and CEO / GM
16.3
15.0 14.9 15.0
with a difference of RMB 14,753 between its average and
median TCE. In relative terms, those gaps are 16.20 percent
and 13.80 percent of the respective role’s median TCE.3

Finally, when looking at the median TCE by company size

CHINA Less 50 50-250 More 250

(number of employees) and by city tier, it is worth to highlight
that compensation oscillates more when splitting the results
Comparison of Wages by City Tier by city tier rather than by company size. The total cost per
34 employee is apparently more related to the location of a
Total Cost per Employee / Month. In Thousand RMB
company (the city tier) than the actual headcount of the
Median Mean
26.9 company.
23.6
21.1 As already mentioned in section 2. Regional Wage
18.1 18.3
15.0
Developments, once a trend had been spotted within a region
13.3
11.4 (whether an increase or a decrease on the expected wage
increase for next year), it would hold most of the times across
the different levels of seniority within that region.

CHINA Tier 1 Tier 2 Tier 3

Comparison of Wages by City Tier & Company Size

Total Cost per Employee / Month. Median Values. In Thousand
RMB
Less 50 50-250 More 250

18.9
18.0 18.1
16.3
14.9 15.0
13.0 13.2 13.4 12.8
10.5 10.0

CHINA Tier 1 Tier 2 Tier 3

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5. Compensation Levels: Perception Perceived Salary Level in Comparison to Other

Companies (%)
An ample majority of the member companies of the German Blue Collar Workers
Development Low Average High
Chamber of Commerce in China considers the current levels
of compensation are in line with the market’s average, 71.6
70.7 71.1
66.5 66.0 68.2
whether for blue collar workers or white collar professionals. 63.1
Around a fourth of the surveyed organizations consider
compensation to be higher than that of the current market
compensations standards: 22.4 percent when the evaluation
26.2
concerns blue collars, 25.7 percent when it pertains to white 22.0 22.6 22.6 21.4 22.4
19.4
collars. 10.7 11.4
11.4 9.9 7.0 9.4
6.3
When it comes to blue collar workers, Taicang / Kunshan,
2013 2014 2015 2016 2017 2018 2019
and Other PRD are the two regions that perceive salaries are
high for these professionals: 36.6 percent of the contributors
Results by Region
in Taicang / Kunshan; 35.7 percent in Other PRD. By
company size, the largest companies (those with more than Low Average High
250 employees) tend to perceive salaries as high in much Shanghai 10.4 72.1 17.5
lower frequency (15.4 percent) compared to smaller sized Suzhou 14.3 61.9 23.8

companies (less than 50 employees): 26.8 percent. Finally, Taicang / Kunshan 7.3 56.1 36.6

looking at industry-based results, the most polarized industry Other YRD 6.5 73.9 19.6

Beijing 14.3 60.7 25.0

is plastic / metal products where 39.1 percent of the
Tianjin 12.0 68.0 20.0
companies from this industry contributing to the survey this
Other North 3.2 67.7 29.0
year consider salaries are on par with market standards;
Shenzhen 23.5 64.7 11.8
another 34.8 percent differ and consider them high, and 26.1
Guangzhou 86.7 13.3
percent find them low.
Other PRD 3.6 60.7 35.7

For white collar professionals, there are no significant

Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas.
differences across regions with regards to the perception of 35
compensation being above the market. In Shenzhen and to a Results by Company Size
lesser extent in Beijing, contributors consider the wages for
white collar professionals below the market: 16.7 and 10.9 Low Average High
percent, respectively. By company size, once again – as it Less 50 9.8 63.4 26.8

happened with blue collar professionals – the smaller 50-250 11.0 64.0 25.0

companies (less than 50 employees) consider in a higher More 250 6.9 77.7 15.4

proportion compensation as high (33.1 percent). By industry,

plastic / metal products reproduce a similarly polarized Results by Industry
pattern, and companies in the electronics’ sector perceive in
a higher proportion (10.7 percent) that wages are lower than Low Average High
Machinery/Industrial
the market average. Equipment 9.9 64.2 25.8
Automotive 4.1 77.0 18.9
Plastic/Metal
26.1 39.1 34.8
Products
Electronics 75.0 25.0
Chemicals 7.7 69.2 23.1
Others 11.5 72.1 16.4

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Perceived Salary Level in Comparison to Other

Companies (%)
White Collar Workers
Development Low Average High

72.5 73.4
69.6 69.3
65.1 66.9
64.1

26.5 26.0 24.2 25.7

23.3
16.3 17.6
9.4 8.9 7.1 7.4
11.1 9.1 6.5

2013 2014 2015 2016 2017 2018 2019

Results by Region

Low Average High

Shanghai 7.8 67.2 25.0
Suzhou 9.1 63.6 27.3
Taicang / Kunshan 4.9 65.9 29.3
Other YRD 6.1 69.4 24.5
Beijing 10.9 60.9 28.3
Tianjin 7.4 66.7 25.9
Other North 3.0 69.7 27.3
Shenzhen 16.7 55.6 27.8
Guangzhou 5.6 72.2 22.2
Other PRD 3.6 75.0 21.4

Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas.
36
Results by Company Size

Low Average High

Less 50 5.7 61.1 33.1
50-250 9.4 67.2 23.3
More 250 6.6 73.0 20.4

Results by Industry

Low Average High

Machinery/Industrial
Equipment 5.1 68.8 26.1
Automotive 6.1 69.5 24.4
Plastic/Metal
16.7 50.0 33.3
Products
Electronics 10.7 71.4 17.9
Chemicals 6.9 72.4 20.7
Others 8.4 64.3 27.3

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6. Productivity Evaluation of Wage Levels Considering Productivity (%)

Development
The survey measures perceptions on productivity via three
High Reasonable Low
different questions or indicators.

The first indicator monitors how contributors perceive the 53.7 52.5
49.9 49.4
46.0
evolution of wages within their organization, once
productivity and the qualification levels of the staff have
28.8 30.3 28.9
been considered (Indicator 1: “Evaluation of wage levels 24.3 24.5
considering productivity”). The second one is a forward- 23.7 21.7 22.0 23.0
21.3
looking measure where contributors are asked to share which
scenario is more plausible in the future: one in which 2015 2016 2017 2018 2019
productivity will match wage increases; or one in which that
The exact formulation of the question: “Taking productivity and qualifications into
will most likely not happen (Indicator 2: “Will productivity account, how do you evaluate overall salary levels in China?”.
increase match wage increases?”). Lastly, contributors are
asked whether productivity has been in line with wage Results by Region
increases. Such indicator attempts to assess productivity
growth, albeit not in absolute terms but expressed in relative High Reasonable Low
Shanghai 28.0 54.9 17.1
terms using wage increases as the anchor for a comparison
Suzhou 21.7 39.1 39.1
(Indicator 3: “Productivity increase compared to wage
Taicang / Kunshan 33.3 42.9 23.8
increases”).
Other YRD 24.5 49.0 26.5

Beijing 23.9 52.2 23.9

In this year’s results, when looking at the overall data, 52.5
Tianjin 14.3 53.6 32.1
percent of respondents believe their compensation levels are
Other North 12.1 51.5 36.4
reasonable given their current productivity (53.7 percent last
Shenzhen 38.9 50.0 11.1
year). When it comes to the expectation about productivity
Guangzhou 11.1 55.6 33.3
keeping the pace of wage increases, 56.0 percent of the
Other PRD 14.3 67.9 17.9
respondents consider it to be the most likely scenario. That is
Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas.
5.3 p.p. above last year’s percentage. Finally, 64.3 percent of
the companies consider productivity increases were similar to
37
Results by Company Size
wage increases (60.2 percent in 2018).

When segmenting these indicators by either region, company High Reasonable Low
Less 50 29.5 52.2 18.4
dimension, or industry, there are certain developments worth
50-250 26.6 45.2 28.3
pointing out. At the regional level, dissatisfaction with wage
More 250 15.9 62.3 21.7
levels is the highest in Shenzhen: 38.9 percent of the
companies surveyed their rate wages as high. Shenzhen is
also associated with a larger-than-average level of skepticism Results by Industry
with regards to the ability to match productivity with wage
increases: 22.2 percent consider it unlikely, 7.6 p.p. above High Reasonable Low
Machinery/Industrial
the overall sample’s 14.6 percent. Moreover, such perception Equipment 19.4 53.1 27.5
Automotive 22.2 51.9 25.9
permeates to the region’s impression on productivity gains,
Plastic/Metal
29.2 54.2 16.7
where 27.8 percent of the contributors in Shenzhen consider Products
Electronics 28.6 64.3 7.1
productivity increases have been lower compared to wage
Chemicals 17.2 58.6 24.1
increases – that is 5.6 p.p. higher than China’s overall.
Others 30.8 48.7 20.5
When it comes to company size, larger companies (those
with more than 250 employees), find current wage levels
reasonable in a much more significant proportion than their
increases, against China’s average of 20.2 percent.
peers at smaller-sized companies do. Companies with more
than 250 employees also remain more positive with regards Lastly, when observing the productivity indicators from an
to the ability for productivity to keep up with salary industry perspective, the chemicals industry (accounting for 6
increases. Only 13.9 percent among those believe percent of the sample in this edition) presents a relatively
productivity increases have not been on par with wage larger proportion of companies that report higher

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Will Productivity Increase Match Wage Increases? (%) Productivity Increase Compared to Wage Increases (%)
Development Development
Unlikely Neutral Likely Lower Similar Higher
64.0 64.3
60.2
58.2 56.0
49.2 49.9 50.7 48.5
42.4

32.5 33.8 34.8

28.3 29.4 33.5 28.8 23.9
22.5 20.2
18.4 16.3
13.5 14.4 14.6
21.3 22.7
15.9 15.6
13.5

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

The exact formulation of the question: “Evaluate productivity increase at your company
The exact formulation of the question: “Do you believe productivity increase will be able compared to overall wage increases”.
to match wage increases in the future?”.

Results by Region Results by Region

Unlikely Neutral Likely Lower Similar Higher

Shanghai 16.8 28.1 55.1 Shanghai 20.0 60.5 19.5
Suzhou 17.4 30.4 52.2 Suzhou 21.7 69.6 8.7
Taicang / Kunshan 9.5 38.1 52.4 Taicang / Kunshan 22.0 58.5 19.5
Other YRD 18.8 20.8 60.4 Other YRD 14.6 64.6 20.8
Beijing 15.2 39.1 45.7 Beijing 23.9 69.6 6.5
Tianjin 10.7 25.0 64.3 Tianjin 23.1 61.5 15.4
Other North 3.0 18.2 78.8 Other North 12.1 78.8 9.1
Shenzhen 22.2 44.4 33.3 Shenzhen 27.8 66.7 5.6
Guangzhou 33.3 66.7 Guangzhou 22.2 66.7 11.1
Other PRD 17.9 28.6 53.6 Other PRD 21.4 67.9 10.7

Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas. Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas.
38
Results by Company Size Results by Company Size

Unlikely Neutral Likely Lower Similar Higher

Less 50 16.0 33.1 50.9 Less 50 21.0 61.1 17.9
50-250 16.1 28.9 55.0 50-250 24.3 63.3 12.4
More 250 10.9 25.5 63.5 More 250 13.9 69.3 16.8

Results by Industry Results by Industry

Unlikely Neutral Likely Lower Similar Higher

Machinery/Industrial Machinery/Industrial
Equipment 10.6 33.1 56.3 Equipment 21.5 63.3 15.2
Automotive 16.1 28.4 55.6 Automotive 16.0 71.6 12.3
Plastic/Metal Plastic/Metal
16.7 20.8 62.5 29.2 54.2 16.7
Products Products
Electronics 17.9 28.6 53.6 Electronics 21.4 64.3 14.3
Chemicals 13.8 17.2 69.0 Chemicals 13.8 65.5 20.7
Others 17.1 29.8 53.2 Others 20.5 62.8 16.7

productivity increases relative to wage increases (20.7
percent, versus China’s overall 15.6 percent). The industry’s
confidence with the ability for productivity to keep its pace
with salary increases in the future is also the highest across
the set of considered sectors: 69 percent likelihood.
Plastic / metal products industry (5 percent of the sample) is
an interesting case: although 29.2 percent report productivity
gains have been lower than salary increases, the sector
remains undaunted in its confidence towards the future, with
62.5 percent considering likely that productivity will match

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wage increases. Share of Labor Costs over Total Costs (%)

Overall China and by Company Size
To further investigate the productivity, two additional 2018 2019
requests for the contributors are added: First, respondents
are enquired about the share of labor costs over total costs
38.7 38.8
within their respective organization. Second, they are
enquired on several items they have to evaluate based on the 29.2 29.9
25.6 26.1
items’ relative importance as drivers of productivity. 23.1
19.3

The proportion of labor costs to total costs amounts to 29.9

percent. However, such percentage varies significantly
depending on company size. Thus, smaller companies (less
than 50 employees) present a higher proportion of labor China Less 50 50-250 More 250

costs relative to total costs with 38.8 percent, than medium

(50 to 250 employees) with 26.1 percent, or larger (more
than 250 employees) organizations with 23.2 percent. Main Factors for Productivity Increase (%)
Ranked by Very Important and Important
On the main factors organizations perceive to be critical for
Very important Important Neutral Not important n/a
productivity gains, improving internal processes remains by
Improved Internal
far the most important: 92.2 percent of contributors consider Processes
43.3 48.9 6.0

it very important or important. Better internal training and the Better Internal Training 18.8 67.3 10.8
use of key performance indicators (KPIs) follow: 86.1 percent Use of Key Performance
Indicators
30.6 54.0 10.8
and 84.6 percent, respectively, perceive them as very
important or important. Better Work Experience 16.8 62.5 16.8

Increased Automation 29.2 41.0 17.6 10.8

Breaking down the importance of those items by company
size, a comparison between companies with less than 50 Improved Retention 13.0 55.7 22.6 5.0
Improved General
employees and companies with more than 250, points out a 14.3 53.8 26.7
Education
significant difference in the way increased automation is
regarded as critical for achieving productivity gains. In the 39
case of smaller companies, 53.9 percent consider increased
automation as very important or important; at larger entities Main Factors for Productivity Increase (%)
that proportion climbs up to 84.1 percent, about 30 p.p. of At Companies with Less 50 Employees vs. More 250 Employees
difference. Very Important + Important (in %) at: Difference in the Degree
Less 50 employees More 250 of Importance (in p.p.)

It should be stressed that whereas in 2018 increased Improved Internal 83.0

14.1
Processes 97.1
automation was the second factor in order of importance 86.1
Better Internal Training 88.4 2.3
among companies of more than 250 employees, only behind
Use of Key Performance 78.8
improved internal processes, in the present edition such item Indicators 89.1 10.3

has been overtaken by the use of KPIs and better internal Better Work Experience
78.8
-2.0
76.8
training. 53.9
Increased Automation 30.1
84.1

Improved Retention 62.4

73.2 10.8
Improved General 69.1
Education 65.9 -3.1

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The section on productivity is concluded with the different Strategic Changes due to Rising Labor Costs (%)
strategic changes companies might be pondering in a context Overall Results for China
of rising labor costs. 60.1 percent of all companies 2018 2019
58.3 60.1
contributing to the survey in 2019 have no strategic changes
planned due to increasing labor costs (1.8 p.p. above last
year’s 58.3 percent). 29.7
25.7

Whenever there is some change in stock, increasing

6.6 7.0 4.3 4.2
automation is the most common path: 25.7 percent of 1.1 3.0

respondents advocate for this course of action. Differences

No strategic Plan to Relocation Relocation to Other
on support for increased automation arise by company size: changes increase within China* another
planned automation country*
8.8 percent of companies with less than 50 employees plan
to increase automation. It goes up to 27.9 percent for
* Relocation to lower labor cost areas.
companies with 50 to 250 employees and reaches its peak
with 42.7 percent of companies with more than 250
Strategic Changes Due to Rising Labor Costs 2019 (%)
employees planning to increase automation. Overall Results for China and by Company Size (nº of Employees)

Relocation to lower labor cost areas, either within China or China Less 50 50-250 More 250

76.1
abroad, is considered only by a combined ten percent of 60.1

55.3
contributors. By company size, mid-sized organizations (50 to
47.8

42.6
250 employees) are considering such alternatives in the

27.9
highest proportion (13.4 percent). The percentage of 25.7
8.8

8.4
7.5
7.0

5.7
5.0

4.2

3.4
4.4
respondents who are considering relocating outside China

3.0

3.7
1.9

1.5
has gone from one percent last year to three percent in
No strategic Plan to Relocation Relocation to Other
2019. changes increase within China* another
planned automation country*
Finally, turning back to the productivity topic of this section, * Relocation to lower labor cost areas.
there are some interesting findings when considering
strategic changes based on how companies perceive salaries. Strategic Changes Due to Rising Labor Costs 2019 (%)
40
Based on How Wages in China are Perceived
First, when companies consider salaries as high, they are
China Companies that perceive wages Companies that perceive wages
more likely to have some course of action planned: 50.9 are low, having considered are high, having considered
productivity & qualifications productivity & qualifications
percent, against the 39.9 percent observed for China’s
60.1 63.1
overall, or 36.9 percent among companies that consider 49.1
wages are low.
25.7 25.2 29.3
13.8
Second, there is not such a sharp difference between their 7.0 4.5 4.2 3.6 4.3
3.0 3.6 3.4
plans to increase automation as one might have initially
expected: 25.2 percent, among companies perceiving wages No strategic Plan to Relocation Relocation to Other
changes increase within China* another
are low; 29.3 percent when wages are perceived as high. planned automation country*

* Relocation to lower labor cost areas.

Lastly, companies that perceive salaries being high are three
times more likely to relocate within China compared to
companies viewing wages being low. Relocating to another
country, however, remains equally unlikely, regardless of how
wages are perceived. Thus, that would suggest relocating
outside China is not an option that is much affected by how
salaries are perceived in comparison with productivity
according to the data, but it does exert a considerable
influence towards considering a move within China.

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7. Wage Determination Importance of Factors for Fixing Wage Adjustments (%)

Ranked by Very Important + Important
Company performance and individual performance are, Very important Important Neutral Not important n/a

among the pool of twelve factors presented to contributors, Individual

Performance 52.9 43.3 2.9
the two regarded as most important for wage negotiations.
More than 50 percent of the surveyed organizations see Company
54.8 39.7 4.6
Performance
those as very important: 54.8 percent, in the case of company
Inflation Adjustments 17.3 56.8 20.0 4.6
performance; 52.9 percent for individual performance.
Compared to last year, both have strengthened their grip on Competition with
9.2 56.9 27.1 4.4
Other Companies
its relative importance: company performance is labelled as
very important in a proportion that is 6.1 p.p. above that of Seniority of Staff 7.4 50.6 33.5 8.2
2018; individual performance comes with a 2.2 p.p. increase
German Chamber
6.6 43.6 37.7 6.1 5.9
in the percentage of contributors that regard it as very Wage Report
important, when compared to last year. Meeting 3.4 41.1 48.1 5.9
Expectations of Staff
Following the above, next in perceived importance come
Other Wage Reports 4.4 39.8 40.5 8.3 7.0
adjustments due to inflation, and the pressure exerted from
other companies to remain competitive compensation-wise. Retention of Staff 5.9 37.7 43.2 9.3
Although less critical factors than the company and individual
Government Wage
performances (fewer mentions to them being very important), Guidelines 6.1 28.8 36.7 18.0 10.4

they are nonetheless still seen as important by 56.8 and 56.9 Minimum Wage 7.2 26.1 30.3 22.1 14.3
percent of respondents. Adjustments

Other Government 2.1 14.8 39.0 25.6 18.4

Retention of staff, one of the HR challenges regarded as Policies

more impactful in business operations (see section 8. HR

Challenges, in this chapter), presents a moderate importance
when it comes to determining wage adjustments with a
combined 43.6 percent of very important or important
mentions. Most Important Factors for Wage Negotiations (%)
41
Ranked by Very Important + Important
Government wage guidelines, minimum wage adjustments,
and other government policies have the lowest perceived Very important Important
Individual Negotiations 28.4 42.7
levels of importance in fixing wages. Most likely this is
because compensation at member companies of the German Department Wide
4.8 28.8
Negotiations
Chamber of Commerce in China is well above those minimum
Labor Bureau 2.3 9.5
thresholds. A comparison between the lowest median
compensation by region in this year’s edition (RMB 9,800 / Collective Bargaining 2.1 9.3

month, in Other PRD) and the statutory minimum wage in

Work Council 1.2 6.4
Shanghai (RMB 2,480 / month, the highest minimum wage in
China), reveals that the compensation among German Official Trade Union 0.8 6.2

companies in China is at least nearly four times higher than

the minimum wage in Shanghai. Besides, this year’s median
total cost per employee among companies contributing to the
survey is RMB 15,000 / month. That is 2.2 times higher than
the latest official national average compensation in China,
according to the National Bureau of Statistics: RMB 6,872 /
month, in 2018.
Both in terms of the importance of the different factors
evaluated for salary adjustments and salary negotiations, this
year’s results do not represent a significant difference from
the historical data.

Consistent with the perceived importance for wage

adjustments, when the time comes for salary negotiations,
individual discussions are regarded as the most critical: 42.7
percent of contributors consider them important, 28.4
percent very important. Combined that yields a 71.1 percent,
and it is a considerable gap against the second most crucial
factor, department negotiations, at 33.6 percent.

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8. HR Challenges Impact of HR Related Challenges in Business Operations (%)

Ranked by High + Medium impact
Companies continue to experience rising labor costs, High Medium Low No impact n/a
Rising Labor Costs
recruiting, and retaining qualified staff as the most impactful 38.9 50.3 7.21.2

Recruiting Qualified Staff 34.8 53.2 7.9 2.5

HR challenges in their business operations.
Retaining Qualified Staff 30.6 49.9 12.6 5.2
Social Insurance /
17.6 54.9 19.0 6.6
In comparison to last year, recruiting and retaining qualified Housing Fund
High Cost for Training 9.5 49.5 33.3 5.2
staff have shown a relaxation in the proportions to which High Staff Turnover 17.6 39.3 26.3 14.1

they are regarded as highly impactful. Recruiting qualified Labor Arbitration Cases 3.9 24.2 36.9 31.7

staff today is at 34.8 percent, 5.6 p.p. below 2018; more Dealing with Labor Bureau 4.6 16.4 31.9 43.5

Collective Bargaining 3.1 16.8 26.7 49.7

moderate is the case on retention, which 30.6 percent of
Strikes / Unrest 13.3 5.2 16.6 61.1
contributors qualify it as highly impactful (1.1 p.p. below last
Union Organization 1.2 12.8 35.2 48.0
year’s mark).

Rising labor costs remain firmly as the top HR challenge: 38.9

Impact of HR Related Challenges in Business Operations (%)
percent of the surveyed organizations see them as highly Based on Whether Companies Have Production Activity in China
impactful, 1.3 p.p. above last year. Companies focusing ONLY in producing in China: High Medium
Companies with NO production activity in China: High Medium
Companies with production and other activities in China: High Medium
Rising labor costs are regarded as specially harming to
50.8 41.5
business operations when respondents’ only activity focus in Rising Labor Costs 34.3 52.2
41.8 51.2
China lays in production. Among them, the extent to which
33.8 52.3
they qualify rising labor costs as highly impactful climbs up to Recruiting Qualified Staff 41.6 46.1
29.7 58.5
50.8 percent. That is in high contrast to a much more 24.6 50.8
Retaining Qualified Staff
conservative 34.3 percent for companies that do not perform 34.8
28.5
44.4
51.6

production in China. 18.5 58.5

Social Insurance / Housing Fund 14.0 51.1
18.7 59.8
Recruiting and retaining qualified staff are, however, more
15.4 44.6
High Cost for Training
notorious in their impact on operations to companies that do 10.7
7.3
46.6
54.1

not develop any production activity in China. For this cohort, 20.0 30.8
High Staff Turnover 18.5 36.0
42 recruiting qualified staff tops rising labor costs as the most 17.1 41.1

impactful to business operations. These results point directly 3.1 26.2

Labor Arbitration Cases 5.1 18.5
to white collar centered HR challenges. 2.8 27.6

3.1 23.1
Dealing with Labor Bureau 5.1 12.9
Although not as impactful as the top three HR challenges, 4.1 17.1

another triad stands out. Social insurance / housing fund, 3.1 20.0
Collective Bargaining 2.2 13.5
cost of training, and staff turnover, they all claim their seat as 2.8 19.5

challenges to business operations. For 72.5 percent of the 20.0

10.1 2.2
7.7
Strikes / Unrest
14.6 6.1
contributors, social insurance / housing fund represents a
1.5 13.8
challenge, though with varying degrees of intensity: 17.6 Union Organization 8.4
1.6 16.7
percent see it as highly impactful, another 54.9 percent see it
having a medium impact. The cost of training follows, with 59 Note: Divided by the main focus of operations in China we have created these segments:
Companies that only focus in production in China (n=65); companies that do not do
percent of surveyed organizations defining it as of high or production in China (n=193); companies with production in China, excluding those that
only do production (n=225).
medium impact. Staff turnover is a challenge to 56.9 percent
of contributors (considering high and medium impact Strategies for Retaining Qualified Staff (%)
mentions combined). Ranked by Very Effective + Effective
Very effective Effective
Finally, the less impactful HR-related issues are dealing with Salary Adjustments 37.1 53.9

union organizations, strikes / unrest, or collective bargaining Bonus System 33.8 54.1

negotiations. However, their perceived strain on operations Career Advancement 39.2 45.2

increases notably when companies only have production Training / Education 13.9 54.4
Work-life Balance
activities in China. Strikes are considered highly impactful to Programs 21.0 42.1

Flexible Working Hours 16.4 42.1

13.3 percent of all contributors; that percentage rises to 20
Paid Overtime 15.4 40.2
percent for production-only companies.
Additional Annual Leave 11.0 42.5

International Placements 11.4 31.5

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Evaluation of Local Staff Skills

Information and Communication Technology (ICT) Skills* Ranked by Good. Total Sample (%)
Good Fair Poor n/a
Reliability 73.9 21.9 2.7
Programming (new)
ICT Work Ethics 71.0 22.8 4.3
Specialist Skills Development of Apps (new) Teamwork 65.8 26.9 5.6

Manage Networks (new) Technical/Domain-specific Skills 63.8 23.0 3.1 10.1

Ability to Learn and Improve 58.0 37.1 3.3
Technical/Domain-specific Skills
Complex Problem-solving 58.0 32.3 7.0
Data Management and Analysis (new) English 57.6 31.9 9.3
ICT
Soft Skills Search and Collect Information Ability to Respond to Rapid Changes 53.0 36.0 8.7
Communication 51.8 39.8 7.0
Complex Problem-solving (reformulated)
Search and Collect Information 44.1 38.5 8.5 8.9
Critical Thinking
Execution/Decision-making 42.9 42.9 11.4
Creativity and Innovation (reformulated) Data Management and Analysis 35.4 40.2 10.8 13.7

Ability to Learn and Improve (reformulated) Creativity and Innovation 33.7 49.3 13.7 3.3
Critical Thinking 32.5 47.2 14.5 5.8
Communication
Manage Networks 21.1 28.4 8.7 41.8
Ability to Respond to Rapid Changes (new) Programming 14.9 25.1 8.7 51.3

Teamwork Development of Apps 10.8 23.0 11.4 54.9

Execution/Decision-making (reformulated)
ICT Specialist Skills (Subset). Contributing sample (%)**
English Language Ability
Soft Skills Good Fair Poor
Work Ethics Manage Networks 36.3 48.8 14.9

Programming 30.6 51.5 17.9

Reliability
Development of Apps 23.9 50.9 25.2

* Adapted from OECD’s Digital Economy Paper “Skills for a Digital World”, 2016 Background report on the ministerial meeting on the digital economy. Some ICT skills are new additions to
the survey in 2019; others have been reformulated to better fit the OECD definition. **Managing networks, programming, and developing apps are skills that do not apply to a significant
proportion of the companies contributing to the survey. For a clearer understanding on how these skills are perceived the percentages are recalculated against the number of contributions
when such skills apply: Manage networks, 281 companies; Programming, 235; Developing apps, 218.

For any company with production in China, even if that is not
its sole focus of activity, rising labor costs have a higher
impact: 41.8 percent, compared to the 38.9 percent for the
overall sample.
Upon asking participants to evaluate a set of strategies on
their effectiveness to retain qualified staff, two cash-related
benefits claim the top spots: salary adjustments and
implementing a bonus system. Career advancement is
perceived as very effective by 39.2 percent of contributors,
and it is the third most effective tool when looking at the
strategies ranked by their combined percentage of very
effective and effective mentions.
complementary skills, and foundation skills. For simplification 43
purposes, in this report they have been boiled down to three
categories. First, ICT specialist skills (hard, technical skills
required to produce, operate, and maintain ICT products and
services); second, ICT soft skills (ability to use the technology
for professional purposes, and to perform tasks associated
with the use of ICT); and, finally, soft skills (English language
ability, work ethics, and reliability).
Except for technical / domain-specific skills, ICT specialist
skills apply only to a portion of the companies contributing.
The proportion of contributors on particular skills range from
the 45.1 percent of all contributing companies that provide

To add further value regarding the information and feedback on the development of applications, to the 58.2

communication technology (ICT) skills, in this 2019 edition an percent that does so for network management. When they

additional set of skills has been integrated. The added skills apply, local staff skills are regarded mostly as fair. Managing

needed to perform efficiently in a global digital environment networks is perceived as good by 36.3 percent of the

have been adapted from the Organization for Economic companies that evaluated that skill; programming is assessed

Cooperation and Development’s (OECD) existing publications as good by another 30.6 percent; finally, local staff skills with

on the digital economy. Compared to previous editions of the regards to the development of apps present the most

Labor Market and Salary Report, the 2019 edition covers to a moderate evaluation: 23.9 percent consider it good, when

fuller extent the hard and technical IT skills needed. such skill applies.

According to the OECD, ICT skills can be classified into four Technical / domain-specific skills, the one ICT specialist skill
categories: ICT generic skills, ICT specialist skills, ICT that applies to most of the companies surveyed, is the fourth-

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most well-regarded across the board: 63.8 percent of Effort Needed to Train Staff (%)
companies consider local staff skills in this regard as good. To Reach the Desired Qualification Level
Low Neutral High
The highest-ranked skills are, in this order: reliability (73.9
61.5 61.5 63.6 61.4
percent of contributors qualify their staff as good), work 57.4

ethics (71 percent), and teamwork (65.8 percent).

36.1 36.3
Despite the new additions, the overall ranking bears 31.1 30.9 30.4
significant resemblance to those of previous years. The first
four skills this year (reliability, work ethics, teamwork, and 7.7 8.2
7.5 5.6 6.3
technical / domain-specific skills) are the same as in 2018,
with the only difference being teamwork and technical / 2015 2016 2017 2018 2019
domain-specific skills trading places in the ranking.

Critical thinking, and creativity and innovation are the skills

least often regarded as good: 32.5 and 33.7 percent, Most Difficult Positions to Recruit (%)
Ranked by Very Difficult + Difficult
respectively. Very closely ranked is the newly added ICT soft
skill data management and analysis: 35.4 percent of Very difficult Difficult
Technical Sales 20.3 32.2
contributors evaluate local staff as good in this particular
domain. Engineering / R&D 19.2 32.2

Management 14.1 34.0

In 2019, for the first time the proportion of contributors
considering the effort needed to train staff as high did not Sales 13.7 30.7

reach 60 percent. With 57.4 percent recorded the Technical Service 11.3 32.1
percentage is four p.p. below last year’s mark.
Marketing 3.6 20.2

Companies continue to struggle to fill technical positions, IT 4.9 16.3

relative to other types of roles: technical sales professionals
Procurement 1.7 12.1
are very difficult or difficult to recruit for 52.5 percent of the
HR 2.1 10.5
contributors; the recruitment of engineers and R&D
44
professionals is almost equally challenging (51.4 percent). Finance 1.7 9.5
Management related roles top technical service professionals Administration 1.5
6.3
as the third type of professionals that is hardest to recruit.

The lack of sufficient professional skills and misalignments on

Reasons Why Positions Cannot Be Filled (%)
salary expectations continue to register as the main culprits Ranked by Major Problem + Problem
companies perceive standing in the way of filling the most
Major problem Problem Small problem No problem n/a
difficult positions to recruit.
Insufficient
35.0 53.6 8.31.2
Professional Skills

High Salary
34.4 50.3 12.81.0
Expectations

Insufficient
22.2 50.7 23.2 2.5
English Skills

Insufficient
Work Experience 10.8 51.6 31.9 3.7

Not Enough
13.3 41.4 29.8 13.0
Applications

Company is Not
Competitive Enough 6.2
34.6 35.8 20.7

Company Location 12.6 26.5 29.8 28.2

Lack of Experience at
5.2 26.7 50.5 15.5
Foreign Company

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9. Gender Wage Equality with those of the WEF Report.

Another novelty in this year’s edition has been the
introduction of an indicator of wage equality between
women and men.
The methodological underpinnings to build up such an
indicator conform with the World Economic Forum (WEF)
2018 Global Gender Gap Report’s Wage Equality Between
Women and Men for Similar Work score. The score is one of
the variables under the
Opportunity subindex. In turn, the WEF Global Gender Gap
Index is built from four major subindeces: Educational
Attainment, Health and Survival, Political Empowerment, and
Economic Participation and Opportunity.4
Besides the obvious methodological advantage that comes
from using an already established indicator, there is also the
possibility to put in context the results obtained in this report
The score wage equality between women and men for similar
work among companies contributing to the survey amounts
to 0.798 (0 represents complete inequality, 1 total equality).
Such score is above that recorded for China (0.643), or
Germany (0.717) by the WEF Report in 2018. When
benchmarking against the WEF Report, the 0.798 score
would claim the sixth position in a ranking of 140 countries.5
Based on regional scores, companies in Other PRD area,
Economic Participation and
Beijing, Tianjin, and Shanghai assess themselves as more
egalitarian in gender compensation than companies in
Guangzhou or Shenzhen do. Additionally, the larger the size
of a company (by number of employees), the higher the wage
equality score. Among industries, other industries, plastic /
metal products, and automotive register the highest ratings.

Wage Equality Between Women and Men

For Similar Work
2018 Global Gender GAP Report.
World Economic Forum
Data in %
Normalized Wage Equality Global Gender
Not at all. Significantly Fully. Equal to Data (scale 0-1), for Similar Work Gap Score
below those of men
1 2 3 4 5 6 7 those of men where 0 = Not
Neutral at all & 1= Fully Score RANK Score RANK

Iceland 0.820 1 0.858 1

ALL 7.8 11.2 13.7 14.6 50.0 0.798
Singapore 0.819 2 0.707 67

Oman 0.813 3 0.605 139

Shanghai 7.2 12.4 11.3 16.5 50.5 0.806 45
Suzhou 13.0 4.3 26.1 8.7 47.8 0.790 Tajikistan 0.802 4 0.638 123

Taicang / Kunshan 4.8 21.4 16.7 9.5 45.2 0.770 Albania 0.802 5 0.734 34
Other YRD 4.310.6 29.8 17.0 34.0 0.755
Guinea 0.798 6 0.656 116
Beijing 6.84.5 6.8 6.8 70.5 0.856 German Companies
in China 0.798 - - -
Tianjin 7.1 7.1 17.9 7.1 60.7 0.845
Finland 0.796 7 0.821 4
Other North 12.5 9.4 9.4 18.8 43.8 0.750
Shenzhen 0.722 United States 0.796 8 0.720 51
11.1 27.8 11.1 16.7 33.3

Guangzhou 11.1 11.1 11.1 5.6 22.2 38.9 0.722 Malaysia 0.770 17 0.676 101

Other PRD 10.7 7.1 17.9 64.3 0.875 Thailand 0.749 20 0.763 22

Norway 0.745 22 0.806 11

Less 50 9.4 9.4 13.8 13.1 50.0 0.783 Sweden 0.735 25 0.808 9
50-250 8.4 9.6 14.0 15.2 49.4 0.795
Germany 0.717 33 0.776 14
More 250 5.1 15.4 13.2 15.4 50.7 0.819
Switzerland 0.696 44 0.755 20

Machinery/Industrial Japan 0.696 45 0.662 110

Equipment
8.2 12.0 15.8 15.8 42.4 0.755
World Average 0.645 - 0.680 -
Automotive 8.5 9.8 17.1 15.9 47.6 0.799
Plastic/Metal China 0.643 74 0.673 103
8.3 4.2 16.7 8.3 62.5 0.854
Products
Electronics 7.1 17.9 14.3 21.4 39.3 0.780 Korea, Rep. 0.532 117 0.657 115

Chemicals 10.7 3.6 14.3 21.4 42.9 0.769 Brazil 0.489 132 0.681 95
Others 6.5 12.3 9.1 11.0 60.4 0.841 France 0.488 133 0.779 12

Both the way by which the question is put forward in the questionnaire (“With regards to your company, for similar work, to what extent are wages for women equal to those of men?”) as
well as the 7-degree Likert scale for the responses have been taken from the component Wage Equality Between Women and Men for Similar Work, from the Economic Participation and
Opportunity subindex from the World Economic Forum (WEF) 2018 Global Gender Gap Report. Responses have been normalized (scale from 0 to 1) following on the same methodology as
in the WEF Global Gender Gap Report. Regional Segmentation: Other YRD: Other Yangtze River Delta areas; Other PRD: Other Pearl River Delta areas. Company size (by number of
employees): Less than 50 employees, from 50 to 250 employees, more than 250 employees. Results by Industry: only industries for which the sample is higher than 20 companies.

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10. Additional HR Data 11. Foreigners

Turnover ratios for blue and white collar professionals remain
stable, with just a slight increase of 0.7 p.p. for blue collar
professionals, and 0.3 p.p. for white collar professionals. In
the 2018 edition, the slow, but steady, decline in turnover
ratios for both types of professionals was highlighted. The
decline by only a few tenth of p.p. indicates that such
reduction has been put to a halt.
Although the evolution of the turnover ratios has not been
according to expectations, there is an improvement in the
employment stability recorded in this edition that extends to
both blue collar workers and white collar professionals. In
both instances, the average duration in a company has gone
up approximately four months. As of 2019, companies report
blue collar workers to remain an average of 50.9 months, and
white collar professionals 54.3 months.
Of the 483 organizations contributing to the survey, 76.2
percent employ foreign nationals: one p.p. below the
previous year’s mark. The proportion of companies indicating
they employ foreigners has gone from 83.2 percent in 2015
to the current 76.2 percent.
Small-sized companies (less than 50 employees) report the
largest percentage of foreigners to total employees (16.1
percent). As the size of the organizations increase the relative
weight of foreigners dilutes: companies with 50 to 250
employees report 3.3 percent of their staff are foreign
nationals; two percent at companies higher than 250
employees.
Share of Companies Employing Foreigners (%)
Overall Results and by Company Size Yes No

No remarkable differences are observed in the evolutions of ALL Less 50 50-250 More 250

annual sick days and annual leave. These two HR metrics 5.6 9.4
22.8 23.8 20.1 22.2
have barely oscillated in the last four years. 36.8 37.6

Blue Collar Workers 94.4 90.6

77.2 76.2 79.9 77.8
2018 2019 63.2 62.4

50.9 2018 2019 2018 2019 2018 2018 2018 2019

46.6
46

13.3 14.0
9.8 10.4 Average Percentage of Foreign Employees (%)
3.5 4.0 Overall Results and by Company Size

Turnover Average duration Average annual Average annual 2018 2019

(in %) in company sick days leave (in days) 16.1
(months)

12.1

White Collar Workers 6.3

5.8

2018 2019 3.4 3.3

2.4 2.0

54.3 All Less 50 50-250 More 250

50.3

The most general formula to establish a labor relationship

10.3 10.6 11.7 12 with a foreign national is through the use of a local labor
3.6 3.8
contract (74.4 percent), whereas expat contracts are less
Turnover Average duration Average annual Average annual frequent (45.4 percent). Project-based contracts are used
(in %) in company sick days leave (in days)
(months) only by 7.4 percent of contributors on a very common or
common basis.

The perception about the visa application process has

remained relatively stable in comparison with the results
registered in the previous edition. 40.1 percent of

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contributors consider the application process has not Most Common Type of Contracts for Foreigners (%)
changed (3.3 p.p. above 2018), and another 39.7 percent Ranked by Very Common + Common
find it has improved or significantly improved (0.8 p.p. below 2018 2019
Very Common Common
last year). 44.0 30.4
Local Contract
48.0 33.7
Finally, to conclude this section, companies reporting plans to
replace some, or all foreigners, have decreased slightly in 23.1 22.3
Expat Contract
2019: 36.7 percent, compared to 41.7 percent in 2018. The 24.9 31.3
five p.p. variation is captured mostly by the percentage of
5.2
companies reporting no changes: 45.9 percent this year, 41.5 Project Based 2.2
Contract 3.3 11.1
percent in 2018.

Respondents may select one of the following alternatives: very common, common,
occasionally, rarely, or never .RMB/month, for a 12-month based year.

Evaluation of Visa Process (%)

2018 2019
40.1
36.8
34.6 35.6

15.8 16.3

5.9 7.0
4.1 3.9

Significantly Improved Unchanged Worsened Significantly

Improved Worsened

Future Plans for Positions Currently Held by Foreigners (%)

47
Intention to Replace with Local Staff
2018 2019
45.9
41.5
37.5
33.1

16.9 17.4

4.0 3.6

No Changes Replace Some Replace All Unknown

Hire of Foreign Interns (%)

Options that Apply in Your Company

2018 2019
40.8
36.9

24.0 23.6

13.7
10.6 10.0 10.3 9.6 8.6
6.1 5.9

Use Student Support of Do not need Do not hire Do not hire Other
Visa X1 3rd Party foreign intern due to due to unclear
administrative regulations
burden

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12. General Results Overview

.

BEIJING 46 Companies TIANJIN 28 Companies SHENYANG 14 Companies

Total Cost per Employee 431 data points Total Cost per Employee 479 data points Total Cost per Employee 232 data points

P25: 12,620 P25: 10,000 P25: 6,500

P75: 34,289 P75: 28,607 P75: 20,000

Median: 21,373 6.38 Median: 16,000 6.08 Median: 10,000 6.03

5.75 5.82
5.04 5.35 5.24 5.24
Wage Increases Wage Increases Wage Increases

Forecast Effective Forecast Effective Forecast Effective

2019 2020 2019 2020 2019 2020

SHENZHEN 18 Companies GUANGZHOU 18 Companies TAICANG 34 Companies

Total Cost per Employee 260 data points Total Cost per Employee 303 data points Total Cost per Employee 644 data points

P25: 7,531 P25: 9,000 P25: 8,648

P75: 24,411 P75: 22,866 P75: 28,408

7.46 7.25
6.74 6.97
Median: 12,923 6.63 Median: 14,495
5.94 Median: 14,000 6.09
5.50 5.19
Wage Increases Wage Increases Wage Increases

Forecast Effective Forecast Effective Forecast Effective

2019 2020 2019 2020 2019 2020

48
OTHER PRD 28 Companies

Total Cost per Employee 531 data points

P25: 6,550
P75: 16,927

Median: 9,800
5.75 5.74 5.55

Wage Increases

Forecast Effective

2019 2020

P25 P75

min MAX

Minimum value Maximum value

in a distribution in a distribution

Median
25% of observations

50% of observations

75% of observations

100% of observations

Total Cost per Employee: RMB/month, for a 12-month based year. P25: Percentile 25, compensation level below which 25 percent of the observations concentrate; Median: level of
compensation that divides the distribution in two equal parts; P75: percentile 75, compensation level below which 75 percent of the observations concentrate. Wage Increases: data in
percentage. * There are 8 companies, that belong to the Other North region (outside Shenyang, Dalian, and Changchun) for which data is not presented due to limited sample size.

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DALIAN & CHANGCHUN 11Companies CHINA 483 Companies*

Total Cost per Employee 248 data points Total Cost per Employee 7,128 data points

P25: 7,075 P25: 9,028

P75: 20,250 P75: 28,000

Median: 10,500 Median: 15,000

5.99 5.87
5.48 5.53
4.90
Wage Increases 4.37 Wage Increases

Forecast Effective Forecast Effective

2019 2020 2019 2020

SUZHOU 23 Companies SHANGHAI 196 Companies

Total Cost per Employee 424 data points Total Cost per Employee 2,414 data points

P25: 9,000 P25: 11,00

P75: 27,081 P75: 32,000

Median: 15,000 Median: 19,000

6.04 6.02 6.06
5.65 5.57
4.90
Wage Increases Wage Increases

Forecast Effective Forecast Effective

2019 2020 2019 2020

49
KUNSHAN 10 Companies OTHER YRD 49 Companies

Total Cost per Employee 161 data points Total Cost per Employee 837 data points

P25: 7,900 P25: 8,900

P75: 21,000 P75: 25,000

Median: 12,000 Median: 13,000 6.29 6.14

5.92 5.80
5.39
Wage Increases 3.81 Wage Increases

Forecast Effective Forecast Effective

2019 2020 2019 2020

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13. About the Survey Regional Distribution (%)

Data for the 2019 edition was collected during the period South & Southwest 13.3
40.6 East
from 11 June to 19 July 2019.
North 22.2 64.6

Following on the same methodology from previous editions,

an email invite to contribute to the survey was sent to
members of the German Chamber of Commerce in China. 10.1 9.5
9.1
5.8 6.8 5.8
The invite contained a link to an online questionnaire, that 4.8 3.7 3.7
acted as the data repository.
Shanghai TAI/KUN Beijing Other North Guangzhou
By 19 July, 483 companies – all members of the German
Suzhou Other YRD Tianjin Shenzhen Other PRD
Chamber of Commerce in China – had contributed to the
survey. That represents 20.1 percent of the Chamber’s Sample: 483 companies. TAI / KUN: Taicang and Kunshan; Other YRD: Other Yangtze
River Delta areas; Other PRD: Other Pearl River Delta areas.
membership: one out of five member companies has taken
the survey. Based on the final sample, results are statistically
Industrial Distribution (%)
representative with a 3.9 percent margin of error for a
33.5 Machinery / Industrial Equipment
confidence level of 95 percent.
17.0 Automotive

6.8 Consulting / Legal Services

14. Profile of Contributors 6.0 Chemicals

Most of the contributions come from companies in the 5.8 Electronics

Yangtze River Delta area: 64.6 percent (1.4 p.p. above the 5.0 Plastic / Metal Products
region’s participation in the past edition). Companies from Consumer Goods
3.1
Shanghai remain the most significant contributors, accounting
2.9 IT / Telecommunications
for 40.6 percent of all responses. Companies at other tier-1
locations, such as Beijing, Shenzhen, or Guangzhou, 2.7 Logistics

contribute a combined 16.9 percent. 2.3 Medical Supplies

50 1.9 Construction
Machinery / industrial equipment and automotive industries
take 50.5 percent of all contributions. The latter accounts for 1.7 Environmental Products & Services
17 percent, 2.7 p.p. below the participation shown in 2018. 1.2 Finance
Consulting / legal services (6.8 percent), chemicals (6 1.0 Tourism & Hospitality
percent), electronics (5.8 percent), and plastic / metal
0.8 Education
products (5 percent) add up another 23.6 percent. Together,
these six industries represent 74.1 percent of all companies 0.6 Pharma

who took part in the survey. 0.4 Aerospace

7.2 Other Industries

The distribution of responses based on company size is quite
even: the smallest companies (less than 50 employees)
Sample: 483 companies.
contribute 37.3 percent of all observations, mid-sized
companies (50 to 250 employees) another 34.2 percent.
Main Focus of Activity (%)
Finally, companies with more than 250 employees account
for 28.6 percent of all observations. 59.0 Sales & Marketing

At the individual level, 28.1 percent of the contributions have 56.7 Production

been provided by HR Managers, and 26.4 percent by General 50.7 Services

Managers. HR and C&B Specialists and Supervisors make up 25.9 Sourcing/ Procurement
for another 22.7 percent of the contributors. More than one 24.4 R&D
individual can contribute to a member company's 24.0 Trading
questionnaire, but only one questionnaire per company can 17.0 Production-related Engineering
be submitted. In 2019 a total of 540 individual contributors 3.7 Others
took part in the completion of the 483 surveys collected: an
average of 1.12 individuals per company. Sample: 483 companies. Multiple activities allowed per contributor.

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Company Size (%)

By Number of Employees
37.3
34.2

28.6

Less 50 50-250 More 250

Profile of Contributors (%)

Position of the Company Representatives Participating in the
Survey
Other
HR Director 6.7
3.9 28.1 HR Manager
Finance Director / 6.1
Manager

C&B Manager 6.1

C&B Specialist / 9.8

Supervisor
26.4
HR Specialist / General Manager
Supervisor 12.9

Sample: 483 companies & 540 contributors. An organization’s survey might have been
contributed for more than one individual.

Profile of Contributors (%)

Nationality of the Company Representatives 51
Other
Nationality 4.9

17.3
German
77.8
Chinese

Sample: 483 companies & 540 contributors. An organization’s survey might have been
contributed for more than one individual.

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15. Notes
1. A single number, the Pearson’s correlation coefficient r - often
referred only as the correlation coefficient r - is used to
represent the strength of a correlation between quantitative
variables. The r-value lies between -1 and +1. If r = +1, it
indicates a perfect positive direct correlation. If r = -1, it signals a
perfect negative linear relationship. If r = 0, there is no linear
relationship. See: David J. Hand, Statistics, A Very Short
Introduction (Oxford: Oxford University Press, 2008), page 98.
2. That is, only among the industries with at least 100 observations
at the variable “Expected Wage Increase” in this edition. There are
other industries, such as construction, education, environmental
products and services, logistics, pharma, or tourism and
hospitality where the effective wage increase reported this year
is also below that of their forecast from the previous edition.
However, they are not presented in the report due to insufficient
sample sizes.
scores presented at the WEF 2018 Global Gender Gap Report
have been, in turn, sourced from the WEF Executive Opinion
Survey (EOS), 2017-2018. The study collected, between January
and April of 2018, the views of 16,658 business executives in
140 countries. The average number of contributions per country
was 92.3 with the minimum sample coming from Norway (31
contributions), and the largest samples coming from India (378),
Pakistan (339), and United States (291). The survey was
conducted at the national level by the WEF’s network of Partner
Institutes with the WEF supervising the survey. More information
available: http://reports.weforum.org/global-competitiveness-
report-2018/appendix-b-the-executive-opinion-survey-the-
voice-of-the-business-community, accessed 27 August 2019.

3. Although the more frequently used methodologies to assess the

dispersion of a variable (how much a distribution is stretched or
squeezed) is through the use of the variance or the interquartile
range (IQR), the comparison in the relative gap between the
median and the average already signals that the CEO / GM and
the Deputy GM / Branch Manager roles are the ones that
present a more spread distribution. That is, it is among senior
management roles where the most significant differences in
compensation are observed. The IQR is a measure of statistical
dispersion equal to the difference between the 75th and 25th

52 percentiles of a given distribution. The larger the IQR, the more

stretched is a distribution; the smaller the IQR, the more
squeezed. In the 2019 edition, the IQR for the role CEO / GM
was RMB 93,750; for the Deputy GM / Branch Manager role
was RMB 50,000. They were, by far, the two largest IQRs, with
the next one following being that of Legal Manager (RMB
29.775).

4. The specific formulation of the question, the 7-degree Likert

scale for the responses, and the normalization of the scores
presented in this report are identical to those in the World
Economic Forum (WEF) 2018 Global Gender Gap Report. The
Wage Equality Between Women and Men for Similar Work is one of
the five variables that constitute the subindex Economic
Participation and Opportunity. The other four variables are
ratios: female labor force participation over male value; female
estimated earned income over male value; female legislators,
senior officials and managers over male value; and female
professional and technical workers over male value. In turn, the
Economic Participation and Opportunity subindex, together with
Educational Attainment, Health and Survival, Political
Empowerment, and Economic Participation and Opportunity are
combined to generate the Global Gender Gap Index. To access
the report: http://www3.weforum.org/docs/WEF_GGGR _2018
.pdf, accessed 27 August 2019.

5. The Wage Equality Between Women and Men for Similar Work

In partnership with
 Labor Market
BR I E F
& Salary Report
2019 | 2020
IV Appendix: Definitions
1. Regions
Regions have been assigned based on the city the company
is located at in accordance to responses in the survey. The
amount of observations (all positions combined) collected for
the variable “2020 Forecast Wage Increase” is: Shanghai 2,564
observations; Other East 2,080; Beijing 425; Other North
1,106; Shenzhen / Guangzhou 533; Other South 535.
Overall, 7,243 observations have been gathered for this
variable.
2. Positions
Production workers include the following individual positions:
Blue Collar, Operator, Shift Leader, Production Supervisor
and Production / Plant Manager. Junior professionals are
those with 0 to 3 years of job experience; Mid-Level
professionals have 4 to 7 years of job experience; Senior
professionals are those with 8 or more years. The overall
wage increase for a specific level of seniority (Junior, Mid-
Level, Senior) is the average of all observations for that level
of seniority in the following functional areas: Administration,
Sales, Purchasing, Finance, HR, Quality Control, Engineering /
R&D, Logistics, and Consultant / Project Manager.
Additionally, the expected increases for IT Staff and Legal
Staff are included in the calculations for Junior Professionals.
IT Manager and Legal Manager forecasted wage increases
are included in Senior Professionals. Finally, two roles
(Deputy GM / Branch Manager and CEO / GM) are
presented individually due to their uniqueness.
3. Industries
The graphic only shows industries with a minimum of 100
observations (all positions combined) for the variable 2020
forecast wage increase.
4. City Tiers
First tier cities are Shanghai, Beijing, Guangzhou, and
Shenzhen. Second tier cities are provincial capitals and cities
in the vicinity of first tier ones, such as Suzhou, Wuxi,
Taicang, Hefei, Nanjing, Dalian, Qingdao, Chongqing and
others. Third tier cities are smaller cities, mainly in the
Yangtze and Pearl River Delta.
Additional Definitions
Work Experience:
Junior: 0-3 years
Mid-Level: 4-7 years
Senior: 8 or more years
Definitions for Job Positions:
PRODUCTION
Blue collar worker: Responsible for line work, packaging, basic
assembly; limited work experience.
Operator: Special but limited skills, operate machinery; some
work experience.
Shift leader: Responsible for managing parts of assembly,
scheduling, training new employees, performing limited
quality control, overviewing safety regulations.
Production Production Supervisor: Project planning, overall
production supervision, resource allocation (e.g. overtime and
material), quality control.
Production manager / Plant manager: Managing production,
planning new production methods, investment and
maintenance issues.
ADMINISTRATION
Junior admin staff: Responsible for basic administrative and
secretarial tasks; 0-3 years of work experience.
Mid-level admin staff: Responsible for administrative tasks,
secretarial and support tasks; 4-7 years of work experience.
Senior admin manager: Responsible for acting as secretary to
GM or similar, assistant to senior management; 8 or more
years of work experience.
SALES
53
Junior sales staff: Responsible for general sales / marketing,
limited technical knowledge; 0-3 years of work experience.
Mid-level sales staff: Responsible for sales / marketing activity,
basic technical knowledge; 4-7 years of work experience.
Senior sales manager: Responsible for advanced technical
knowledge, managing customers and key accounts /
marketing; 8 or more years of work experience.
PURCHASING
Junior purchasing staff: Responsible for general purchasing,
limited technical knowledge; 0-3 years of work experience.
Mid-level purchasing staff: Responsible for purchasing, some
quality control, some technical knowledge; 4-7 years of work
experience.
Senior purchasing manager: Responsible for advanced
technical knowledge, managing purchasing / quality control; 8
or more years of work experience.
FINANCE
Junior accountant / controller: Responsible for general
accounting, supporting senior accountant; 0-3 years of work
experience.
In partnership with

Mid-level accountant / controller: Responsible for accounting,
writing reports, taxation; 4-7 years of work experience.
Senior finance manager: Responsible for accounting, dealing
with tax bureau, controlling payments and receivables,
preparing financial reports; 8 or more years of work
experience.
HUMAN RESOURCES
Junior HR staff: Responsible for basic administrative HR tasks,
support of HR management; 0-3 years of work experience.
Mid-level HR staff: Responsible for administrative HR tasks,
training, pay-roll, overtime management; 4-7 years of work
experience.
Senior HR manager: Responsible for managing the HR
department, hiring / firing, developing training / bonus
system; 8 or more years of work experience.
QUALITY CONTROL
Junior quality professional: Responsible for basic areas of
quality from inspection and supplier management to auditing
and documentation, support to quality Production
Supervisors and quality managers; 0-3 years of job
experience.
Mid-Level quality professional: Development, application and
maintenance of quality standards, materials and products.
Ensure that the quality team is properly monitoring and
testing processes, materials & products; 4-7 years of job
54 experience.
Quality manager: Responsible for continual quality
improvement, improve reliability of new products and
processes. Ensure quality management system conforms to
internal, ISO 9001 or regulatory requirements. Lead a team
of quality inspectors, technicians, analysts and Production
Supervisors; 8 or more years of job experience.
ENGINEERING / R&D
Junior engineer / R&D professional: Responsible for basic
technical tasks, support of senior engineers, basic CAD etc.,
simple IT; 0-3 years of job experience.
Mid-level engineer / R&D professional: Responsible for design
tasks, quality inspection, basic technical adjustments and
product development, IT related tasks; 4-7 years of job
experience.
Senior engineer / R&D manager: Responsible for engineering,
R&D tasks, advanced technical adjustments/implementation;
8 or more years of job experience.
LOGISTICS
Junior logistics officer: Responsible for basic shipping
preparation, basic communication with customers and
In partnership with
Labor Market
BR I E F
& Salary Report
2019 | 2020
service providers, supporting more senior staff; 0-3 years of
job experience.
Mid-level logistics officer: Responsible for preparing customs
forms, tracking shipping, account management, contact with
customs officials; 4-7 years of job experience.
Senior logistics officer: Responsible for managing all import
and export activities, negotiations with service providers,
direct communication with upper management, direct contact
with customs officials; 8 or more years of job experience.
CONSULTANT / PROJECT MANAGER
Junior level: Responsible for basic research, assisting on
projects; 0-3 years of work experience.
Mid-level: Responsible for business intelligence, custom
research; 4-7 years of work experience.
Senior level: Responsible for key accounts, acting as senior
analyst; 8 or more years of work experience.
SENIOR MANAGEMENT
Deputy General Manager / Branch Manager: Supports
CEO/GM to oversee day-to-day operations. Analyze and
implement policies and procedures, resolve internal and
external grievances.
CEO / General Manager / Managing Director: Develops
business strategies and plans; align short term with long-term
goals. General supervision of the company as well as the day
to day operations.
SPECIALISTS
IT staff: Responsible for system analysis, SAP, IT
administration; 0-3 years of job experience.
IT manager: Responsible for programming, SAP, senior IT
administrator; 8 or more years of job experience.
Legal staff: Responsible for client counseling, business
development; 0-3 years of job experience.
Legal manager: Responsible for key accounts, legal cases; 8 or
more years of job experience.
Driver: Responsible for transportation of goods and
passengers.
Since 2008
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