More Chinese regions are raising minimum wages, but will it help boost consumption?
Guangdong, Shanxi and Xinjiang have announced plans to introduce increases of 10 per cent or more in the next few months
As more Chinese provincial-level regions raise minimum wages, economists say the increases could encourage lower-income workers to spend more, but were unlikely to significantly boost consumption or the broader economy and could add to the cost burdens faced by smaller firms.
Sheana Yue, an economist at Oxford Economics, described the moves as “part of a broader rebalancing towards household income”. The adjustments were “targeted at lower-income workers, who tend to have a relatively high propensity to consume”, she said.
Guangdong has planned the largest increase, with its minimum monthly wage to be 2,040 yuan (US$304) from next month – 16.6 per cent higher than at the start of this year.
Resource-rich Shanxi and the far-western region of Xinjiang followed, with both planning to raise their monthly wage floors by about 10.3 per cent from October. The adjustments will see Shanxi’s minimum wage rise to 2,150 yuan and Xinjiang’s to 1,930 yuan.
Chongqing municipality and Sichuan province, both in southwestern China, have published draft proposals to raise minimum wages by more than 7 per cent to 2,360 yuan from December.