[Correspondent Diary] China Faces Surge in Minimum Wage Increases... Accelerating De-Chinaization

Minimum Wage Increase in 4 Regions Including Shanxi, Heilongjiang, Jiangxi, and Xinjiang
Wage Freeze Last Year Due to COVID-19, Possibility of Increase in 18 Provinces This Year

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's state-run Xinhua News Agency reported that on Labor Day, May 1, four provinces and autonomous regions?Jiangxi Province, Shanxi Province, Heilongjiang Province, and Xinjiang Autonomous Region?raised their minimum wages. Last year, due to COVID-19, China's minimum wages were frozen. Xinhua News Agency also reported that six other provinces are currently reviewing minimum wage increases.

[Image source=Yonhap News]

In Shanxi Province, the monthly minimum wage was raised by 150 yuan (approximately 25,896 KRW) in three of its four districts. Accordingly, the monthly minimum wage in District 1 increased from 1,800 yuan to 1,950 yuan, District 2 from 1,700 yuan to 1,850 yuan, and District 3 from 1,600 yuan to 1,750 yuan. Heilongjiang Province and Jiangxi Province also raised their monthly minimum wages, applying minimum wages of 1,850 to 1,860 yuan (based on District 1).

Xinjiang, which has attracted attention due to human rights criticisms from the Western bloc including the United States, raised its minimum wages by 80 yuan each: 1,900 yuan in District 1, 1,700 yuan in District 2, 1,620 yuan in District 3, and 1,540 yuan in District 4. The monthly minimum wage in District 1 of Xinjiang ranks among the top in China's 31 provinces and municipalities directly under the central government.

Currently, among the 31 provinces and municipalities, only six places have monthly minimum wages exceeding 2,000 yuan: Shanghai (2,480 yuan), Beijing (2,200 yuan), Shenzhen (2,200 yuan), Zhejiang Province (2,100 yuan), Tianjin (2,050 yuan), and Jiangsu Province (2,020 yuan).

China's minimum wage is divided into regular full-time minimum wages and non-regular (part-time) minimum wages. Additionally, within the same province, minimum wages are applied differentially by dividing urban and non-urban areas into four districts. Typically, China's minimum wages are adjusted every two to three years.

There is a considerable possibility that minimum wage increases will surge this year. Eight provinces, including Tianjin, raised minimum wages in 2017. Ten places, including Guangdong (Shenzhen), raised them in 2018. Excluding the seven places that raised wages in 2019, 18 places are under consideration for increases.

In fact, the Tianjin Social Security Bureau has begun calculating the minimum wage standards and announced that it will disclose adjustment plans once the review is complete.

Xinhua News Agency reported that some provinces, including Anhui Province, Jilin Province, Xinjiang (Tibet) Autonomous Region, and Sichuan Province, are reviewing minimum wage increase plans and that guidelines will be announced soon.

Ding Li, Director of the Guangdong Provincial Academy of Social Sciences, said, "There is a possibility that Guangdong Province (Shenzhen) will adjust the minimum wage this year," adding, "However, they are likely to carefully consider the extent of the adjustment."

China's minimum wage increases pose a significant burden not only to South Korea but also to global companies operating in China. Minimum wage hikes lead to increased labor costs, which reduce competitiveness. China's minimum wage increases could accelerate the de-Chinaization of overseas companies.

Nevertheless, minimum wage increases appear inevitable. The core of China's 14th Five-Year Plan (2021?2025) is domestic consumption. The Chinese leadership has publicly announced the "dual circulation" policy, which aims to grow the economy through both exports and manufacturing as well as by revitalizing domestic demand, leveraging the population of 1.4 billion as the foundation for economic growth. Without an increase in the real income of Chinese people, the dual circulation policy cannot succeed, which likely presents a significant challenge for the Chinese leadership.

This content was produced with the assistance of AI translation services.