We offer a guide to minimum wages in Mainland China and discuss how labor costs are affected by changes to the minimum wage levels.
Minimum wages in China continue to rise.
Starting in 2022, Shenzhen and Henan raised their minimum wage standards from January 1, while Chongqing, Hunan, and Fujian will raise their minimum wage standards from April 1. Meanwhile, Hebei province has announced that it plans to adjust its minimum wage standards in 2022 after completing an ongoing process of evaluation and calculation.
Since 2021, more than 20 provinces in China have raised their minimum wage standard, including Anhui, Beijing, Guangdong, Hainan, Heilongjiang, Hubei, Jiangsu, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Tibet, Xinjiang, and Zhejiang.
Currently, Shanghai has the highest monthly minimum wage among 31 provinces (RMB 2,590/US$400 per month) and Beijing has the highest hourly minimum wage (RMB 25.3/US$3.9 per hour). Eight regions – Shanghai, Guangdong, Beijing, Tianjin, Jiangsu, Shandong, Hubei, and Zhejiang – have surpassed the RMB 2,000 (US$308) mark in their monthly minimum wage standards.
At the lower end of the wage spectrum, Yunnan’s minimum wage level (RMB 1,350/US$213 per month) is slightly higher than that in Anhui (RMB 1,340/US$212 per month).
According to China’s Provisions on Minimum Wage, the legal minimum wage refers to the minimum labor remunerations that shall be paid by the employers to the employees under the precondition that the employee has provided normal labor within the promissory working hours or within the working hours that is prescribed in the labor contracts.
The minimum wage standards are determined by provincial governments by taking into consideration factors, such as the minimum living costs of local employees and their dependents, the urban residents’ consumption price index, the social insurance premiums and the housing funds paid by the employees themselves, the average salary of the employees, the level of local economic development, the local employment status, etc.
Salary Benchmarking in China
In general, the minimum wage standards appear in two forms, namely the monthly minimum wage standard and the hourly minimum wage standard. The monthly minimum wage standard applies to full-time employees while the hourly minimum wage standard applies to non-fulltime employees, such as part-time and temporary employees.
To be noted, the minimum wage is just the basic wage that employers must pay their employees, which excludes overtime pay, night shift allowance, summer high temperature allowance, the special working environment allowance, and subsidies for meals, transportation, and housing.
Nevertheless, China’s minimum wage standards do include the social insurance premiums and housing fund contributions paid by employees in most regions. In fact, it is possible that the employee’s take-home pay is lower than the corresponding minimum wage standard in these regions. Only a few regions, such as Shanghai, clearly stipulate in their local rules that their local minimum wage standards exclude social insurance premiums and housing fund contributions.
Local governments in China are generally required to update their minimum wages every few years but have the flexibility to adjust wages according to local conditions.
Most provinces set different classes of minimum wage levels for different areas depending on the given region’s level of development and cost of living. For example, a higher minimum wage class is established for the provincial capital and the most developed cities in the province, whereas smaller cities and rural areas fall under a lower wage class.
A complete guide to China’s minimum wages can be found below.
Minimum Wages in China 2021
Yangpu Economic Development Zone
Other county-level cities
Taxkorgan Tajik Autonomous Region
*Certain provinces set minimum wage standards at the county or district level. The cities listed in the table are examples and are not exhaustive.
**Highlighted areas denote jurisdictions that updated their minimum wage in 2022. The monthly minimum wage is for full-time employment while the hourly minimum wage is for part-time employment.
*** Hunan, Zhejiang, and Sichuan provinces allow each city to decide which minimum wage level to apply. The cities given as examples are therefore subject to change.
As the minimum wage rises, minimum standards for other employee benefits, such as overtime pay, other allowances, and subsidies, increase in kind.
The minimum contribution base of the housing fund in many cities is the same as the local minimum wage standards. The change of the minimum wage means the adjustment of the housing fund contribution base in the following months. The ceiling of the housing fund contribution base is usually three times the local average monthly salary of employees in the previous year and the floor of the housing fund contribution base is usually the same as the local minimum wage standard.
To be noted, however, the adjustment of the housing fund contribution base is not always in sync with the change of the minimum wage standard. For example, to reduce labor costs and help struggling businesses survive in the wake of the COVID-19 pandemic, the Shanghai government decided that its minimum contribution base of the housing fund in 2021 will follow the 2020 minimum wage standard, rather than 2021 one.
Companies are suggested to pay attention to announcements from the local government.
Article 20 of the Labor Contract Law stipulates that the wage amount of a worker during their probation period shall not be less than the lowest wage amount for the same job position in the employer’s organization or 80 percent of the wage amount agreed in the labor contract and shall not be less than the minimum wage standard of the locality of the employer.
Therefore, the wages paid by the enterprise to the probationary employees who are on regular attendance should not be lower than the corresponding standard amount.
Different cities have different standards regarding sick leave payments. But one universal rule is that the sick leave wage shall not be lower than 80 percent of the local minimum wage, according to the Opinions on Several Issues concerning the Implementation of the Labor Law of the People’s Republic of China (Lao Bu Fa  No. 309).
Correspondingly, the minimum sick leave wage standard shall be adjusted with the increase of the local minimum wage standard.
Article 27 of the Implementation Regulations for the Labor Contract Law of the People’s Republic of China stipulates that the monthly salary used for calculating the severance payment to an employee shall be no less than the local minimum wage standard. If the average pay of the employee in the 12 months before the termination of the labor contract is less than the local minimum wage standard, the local minimum wage standard shall be used to calculate the severance payment.
Companies may decide to suspend their businesses or production in the wake of internal or external difficulties, such as during lockdowns caused by the pandemic. According to relevant provisions on wage payment during the period of suspension of production:
Referring to the regulations of Zhejiang Province, Hubei Province, and Shaanxi Province, the employer is required pay living allowance at 70~80 percent of the local minimum wage.
According to Article 58 of the Labor Contract Law, during the period in which a dispatched worker is not assigned any work duties, the labor dispatch agency shall pay the worker remuneration on a monthly basis pursuant to the local minimum wage standard.
Article 35 and Article 36 of the Regulations on Work-Related Injury Insurance stipulates that where a worker who sustained a work injury is certified grade 1 to grade 6 disability, he/she shall enjoy corresponding benefits, such as a one-off disability subsidy and monthly disability allowance covered by the work-related injury insurance fund in accordance with the disability grading, among other factors.
Regarding the monthly disability allowance, the injured workers shall be paid at 60-90 percent of their average monthly wage in the 12 months before the injury. Where the amount of disability allowance calculated is less than the local minimum wage standard, the shortfall shall be covered by the work-related injury insurance fund.
The Guiding Opinions of the Ministry of Human Resources and Social Security and the Ministry of Finance on Adjusting the Criteria for Unemployment Insurance Benefits (Ren She Bu Fa  No.71) stipulates that:
With the development of the society and economy, all provinces shall, on the premise of ensuring a sustainable fund, appropriately improve the level of unemployment security step by step, to improve the unemployment insurance benefit criteria to 90 percent of the local minimum wage standard.
In practice, the unemployment insurance benefits are usually paid at 70-80 percent of the local minimum wage standard.
Minimum wages only tell part of the story of labor costs in China.
As China’s economy moves up the value chain and makes the transition to innovation and services, most workers employed by foreign-invested enterprises earn above the minimum wage.
For example, workers in Shanghai made an average of RMB 10,338 (US$1,632) per month through 2020 – nearly four times the local minimum wage.
Moreover, employer social insurance and housing fund obligations add around an additional 37 percent to employers’ labor cost on top of the employees’ gross salary.
For foreign investors, rising wages are an unavoidable feature of doing business in China. Yet, when other factors like productivity, infrastructure, transportation costs, and access to a massive domestic market are considered – China may still emerge as the more cost-efficient option compared to countries with lower statutory labor costs.
When comparing locations for foreign investment into China, minimum wages are a helpful barometer to gauge labor costs across different regions.
From there, identifying industry-specific wage levels, availability of talent, and access to regional incentives offer a more nuanced view of ultimate labor costs within a given region.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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Do these amounts given below include tax? Are they net wages or gross wages?
“Shanghai continues to have the highest minimum wage in China, at RMB 2,480 (US$358) per month, followed by Shenzhen and Beijing, both at RMB 2,200 (US$318) per month.
At the lowest end, the minimum wage in certain areas of Guangxi province is RMB 1,000 (US$145), with rural areas in Liaoning (RMB 1,120/US$162), Hunan (RMB 1,130/US$163), and Anhui (RMB 1,150/US$166) slightly higher.”
Under the current individual income tax system, the threshold to pay tax is RMB 5,000, even if all other kinds of deductions are not considered. Minimum wage in all provinces are still below this number. In this sense, the minimum wages are tax excluded. The minimum wage standard doesn’t include allowances, overtime pay, and social insurance contributions paid by the employers, as well as non-monetary income. However, it does include the social insurance contributions paid by the employees. Thus, we cannot say it’s net wages.
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