EconoChina

A blog on Chinese economy & society

China to increase minimum wage

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China is increasing its minimum wage across the board (the wage rate is set at provincial or even city level) in order to alleviate its labor shortage problem and also to help developing its domestic market. On the heels of recent announcement from Jiangsu to raise minimum wage by 13%, Shenzhen (a leading manufacturing hub down south) is to increase its wage rate by at least 10%. This trend is likely to be replicated throughout the nation.

By increasing labor’s share of profit, China is effectively making its exporters less competitive and reduce its trade surplus to placate the protectionist voices in key markets. The increase wages will go towards enhancing domestic consumption and building a middle class. A much better way to address the global imbalance than revaluing the RMB, which will only benefit China’s competitors.

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Written by Cindy Luk

March 3, 2010 at 1:55 am

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