A Guide to Minimum Wages in China in 2022 (Last Updated on January 30, 2022)

Minimum wages in China continue to rise.

Starting in 2022, Shenzhen and Henan raised their minimum wage standards from January 1, while Chongqing 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, 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, Hunan has the lowest monthly minimum wage level in China at RMB 1,220 (US$192) and 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).

What is the minimum wage in China?

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.

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.

Minimum wage in China guide

A complete guide to China’s minimum wages can be found below.

*Certain provinces set minimum wage standards at the county or district level. The cities listed in the table are examples and are not exhaustive.
Note: Highlighted areas denote jurisdictions that updated their minimum wage in 2021. The monthly minimum wage is for full-time employment while the hourly minimum wage is for part-time employment. 

**Hunan, Zhejiang provinces allow each city to decide which minimum wage level to apply. The cities given as examples are therefore subject to change.

Impact on China’s labor costs

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

As China’s economy moves up the value chain and 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.