Are China’s Wages and Workers Better Off Than Taiwan? – Part I

This is Part one of a two-part series, “Are China’s Wages and Workers Better Off Than Taiwan?”

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Some social media accounts show the shiny and spanking new buildings in China’s top-tier cities to paint China as being economically better-off than Taiwan. This article compares the data to assess the economic reality for workers between China and Taiwan.

First, comparing minimum wages, Taiwan’s minimum wage has reached NT$29,500 a month this year but it was only about an average of NT$8,600 (1,930 yuan) in China in 2024 – or only about a third of Taiwan’s (left chart below).

Among China’s top tier cities, the minimum wage is about NT$12,000 (2,740 yuan) a month in Shanghai today and about NT$10,000 (about 2,500 yuan) in Beijing, Shenzhen and Guangzhou – or only 40% that of Taiwan. 

In Xinjiang, the minimum wage is about NT$8,000 (1,750 yuan), or only a quarter of Taiwan’s (right chart). 

Data source: Taiwan, China

But China’s cost of living in the first-tier cities is actually similar to Taiwan’s six special municipalities and Hsinchu, when including rent (left chart below), which means that China’s minimum wages are not only low but also highly inadequate. 

Data source: Numbeo

Up until 2015, China was growing its minimum wage rapidly but after its stock market crashed in 2015, China drastically slowed down the growth of minimum wage and its minimum wage basically stagnated thereafter — this also coincided with the time after Xi Jinping became China’s leader. China’s minimum wage was growing much faster under Hu Jintao. 

On the other hand, Taiwan’s minimum wage was growing more slowly than China from the late-1990s up until 2015, but after Tsai Ing-wen became president, Taiwan’s minimum wage started growing faster – and faster than China.

If China did not slow down its minimum wage growth and had grown as quickly as its pre-2015 trend, the minimum wages in its top-tier cities could have potentially caught up with Taiwan. However, they are only 40% that of Taiwan today.

Comparing average wages, Taiwan’s average wage has grown to NT$61,002 a month by 2024, but China’s average wage has grown to only about NT$30,000 (about 6,800 yuan) – or half that of Taiwan. (Note that China’s average wage data includes public sector workers while Taiwan’s average wage does not, so Taiwan’s average wage will be higher if it includes public sector salaries.) 

Additionally, China’s average wage data captures only urban workers and does not include rural workers which make up a third of all workers, and they earned an even lower NT$22,000 (4,961 yuan). 

Data source: Taiwan, China, China (Rural) (2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024). Note: China only publishes average wage data for urban non-private and urban private sectors, and the overall urban wage is derived by dividing the total wages in the overall urban sector with the total number of urban workers.

It may be more meaningful to compare Taiwan with cities of more similar development, like the top-tier cities in China. 

But analyzing China’s official data is tricky because it publishes average wage data separately for private sector and non-private sector workers, but the “non-private” sector is also a misnomer because it comprises large and foreign-invested companies which are essentially “private” companies. Nonetheless, we can deduce the overall average wage by dividing the total wages for all workers by the total number of workers. 

Accordingly, Beijing’s average wage would have reached about NT$70,000 a month in 2024 (left chart below). But even so, locating data for such calculations are not readily available for China’s cities, but average data collected by one of China’s largest job recruitment sites like Zhaopin is similar to official sources (bold red line), so Zhaopin’s data can be used as a proxy average wage for China.

But China’s official data in recent years is also discordant with wage data published by third parties – data compiled by Zhaopin and other job recruitment sites showed that China’s wages have been declining from 2023 to 2024 due to China’s current economic downturn (bold red lines in charts below), but China’s official data shows wages continuing to rise. Zhaopin’s data may thus offer a more grounded reflection of current work reality in China – Beijing’s average wage would have fallen to about NT$58,500 instead of reaching NT$70,000.

Since 2024 however, Zhaopin has suddenly stopped publishing wage data as official data started showing greater discrepancy from Zhaopin’s data. The problem stems from China implementing an inflated economic growth target which has led to it presenting economic data which may not reflect actual economic reality, and this rudimentary practice seems to have extended to China’s wage data. 

Data source: Official, Zhaopin (2014-2018, 2019, 2020, 2021, 2022, 2023, 2024)

Starting average salaries compiled by the Caixin DDB New Economy Index also shows China’s wages declining from 2023 to 2024, in stark contrast to China’s official claim of continuous wage growth (blue lines).

Moreover, independent observers are recording more layoffs, pay cuts and wage arrears in China, which also differs from China’s official story of continuous growth. 

Data source: Caixin DDB New Economy Index

Using Zhaopin’s data, Shanghai and Beijing’s average wages have only reached the levels of lower-income municipalities in Taiwan (left chart below) – to about NT$60,000. Shenzhen and Guangzhou’s average wages are lower than Taiwan’s six municipalities and Hsinchu. 

Also remember that minimum wages in China’s top-tier cities are only 40% that of Taiwan, meaning that for low and lower-middle income workers in China, their lives are much worse off than their counterparts in Taiwan.

Data source: Taiwan. Note: Taiwan’s wage data provided at the city level is based on full-time work, the average wage data comprising all workers will be lower.

While average wages in China’s top-tier cities are lower, they have however been growing faster than Taiwan, except after 2022. Thus, China’s average wages may potentially catch up with or surpass Taiwan’s cities within the next decade or so if their wage growth recovers – this is a reminder that Taiwan’s government needs to grow wages faster to stay ahead of China.

According to the Caixin DDB New Economy Index, the downward spiral of China’s wages reversed last year and by the end of last year, have recovered to levels in early-2024, but it is uncertain if the wage reversal among the new economy industries is a general trend among other sectors of China’s economy still reeling from the impact of its economic slowdown.

There are also some other areas which Taiwan needs to improve on.

Comparing wages in the different sectors gives us an indication of the sectors in Taiwan which are being underpaid relative to China (chart below).

For example, based on official data, average wages across the whole of China are generally lower than Taiwan, but its average wages in the ‘preschool education’ and ‘arts, entertainment and recreation’ sectors are higher than Taiwan’s, suggesting that wages in these two sectors in Taiwan are too low.

Also, among the ‘information and communication’, ‘professional, scientific and technical activities’, and ‘wholesale and retail trade’ sectors, China’s wages are not that far off from Taiwan, meaning that wages in these sectors in Taiwan also seem to be suppressed.

Given that sectors such as education, arts and scientific research are areas crucial for the development of knowledge and innovative industries, the relatively low wages in these sectors are of concern.

Taiwan’s average starting salaries for fresh undergraduates are higher than China’s overall starting salaries across the country (left chart below). 

But compared with Shanghai and Beijing, their average starting salaries for fresh undergraduates are higher – of about NT$37,000 a month as compared to Taiwan’s NT$34,000, which suggests that Taiwan’s undergraduates may be underpaid (right chart). 

Note however that given the vast inequality between the minimum and average wages in China, while the salaries for starting salaries for Chinese graduates may be higher on average, there may be a wider spectrum of graduates earning lower (and higher) starting salaries than Taiwan’s graduates, meaning that there may be a greater proportion of Chinese graduates living harsher lives than Taiwanese graduates. 

Also, China’s youth unemployment rate is much higher than Taiwan, which means that more fresh graduates in China are not able to find jobs.

Data source: Taiwan (2016, 2017, 2018, 2019, 2020, 2016-2020, 2021, 2022, 2023, 2024), China (2018-2022, 2019-2023, 2024, Beijing and Shanghai)

Given how low China’s minimum wages are as compared to its average wages, its wage distribution is thus highly unequal.

Beijing and Shanghai’s average wages have been rising (red lines in charts below) as fast as Lithuania and Latvia (dark blue line), until recently. However, China’s minimum wages (pink lines) are much lower than Lithuania and Latvia’s minimum wages (light blue lines).

Lithuania and Latvia used to have similar minimum wages as Beijing and Shanghai, and they have used higher minimum wage growth to uplift wages for the whole population. But China has suppressed wage growth at the bottom, and wages at the top are only pulled up in select sectors.

Data source: Organization for Economic Co-operation and Development

Beijing and Shanghai’s average wages have also caught up with Taiwan’s overall average wage for the whole country, but their minimum wages have languished at only about 40% that of Taiwan.

Though comparing Taiwan with other advanced countries like South Korea and Lithuania, Taiwan’s wages have been stagnant – South Korea’s wages overtook Taiwan in the early-2000s and Lithuania overtook Taiwan a few years ago.

Today, Taiwan’s GDP per capita has grown to be the highest among advanced countries with GDP per capita between the range of US$30,000 and US$40,000 – such as Spain, Slovenia, South Korea and Japan. Beijing and Shanghai’s GDP per capita have also grown to be in the low US$30,000s, while Shenzhen is nearing US$30,000. 

Data source: International Monetary Fund

Taiwan’s GDP per capita is the highest but its minimum wage is the lowest. However, China is even worse – the minimum wages of its top-tier cities are only about a third of countries with similar GDP per capita (left chart below).

If China’s top-tier cities had continued growing their minimum wages at pre-2015 trends, they could have grown as fast as Lithuania, Romania and Bulgaria, to have minimum wages two to four times higher than today (right chart). But China has instead suppressed its minimum wage since 2015. 

Data source: Organization for Economic Co-operation and Development

Average wages in Taiwan and China’s top-tier cities are also the lowest, despite similar GDP per capita (right chart).

Data source: Taiwan, China (2014-2018, 2019, 2020, 2021, 2022, 2023, 2024), other countries

Among advanced countries where wage and economic growth are more balanced, their monthly minimum wages tend to be about 50% of monthly GDP per capita. 

However, Taiwan’s minimum wage has declined to only about a third of its GDP per capita, meaning that its economic fruits are not being proportionately shared with workers. But it’s worse in China, where minimum wages in its top-tier cities have remained low throughout – at only about 10% to 15% of their GDP per capita.

Among the more balanced advanced countries, monthly average wages tend to correspond to monthly GDP per capita, but Taiwan’s average wage has declined to only about two-thirds of its GDP per capita, which again signifies the disproportionate low returns of wages to Taiwan’s workers. China ranks as lowly as Taiwan, where average wages have dropped to only about 70% of GDP per capita (right chart). 

Relative to GDP per capita, the wages of Taiwan and China are thus not being proportionately returned to workers, but it is especially dire for low and lower-middle-income workers in China. 

The gross uneven distribution of wages in China may best be reflected when comparing household incomes. By quintile, the per capita household disposable income of China’s bottom quintile is much poorer than the bottom quintile in Taiwan, as compared to the distance between the richest quintiles in Taiwan and China (left chart below).

The richest quintile in China has over 10 times the income of the poorest quintile, but it is a much lower 3.92 in Taiwan (right chart) – China’s income inequality is vast compared to Taiwan.

Data source: Taiwan, China (1, 2). Note: For the chart on the left, Taiwan’s per capita monthly household disposable income is derived by dividing the average disposable income per household by the average number of persons per household, and may not be directly comparable with China’s data.

As such, in spite of images showing the shiny and spanking new buildings in China’s top-tier cities, when comparing actual wages between Taiwan and China, China’s modern-looking architecture may be inaccessible to many workers. Both have similar cost of living, but China’s wages are lower and less adequate than Taiwan’s. Moreover, the data suggests that China’s government isn’t transparent about the actual wage situation in the country.

On the whole, Taiwan’s wages are more adequate for its cost of living, especially for lower- and lower-middle income workers. Nonetheless, there are improvements Taiwan can make, particularly in raising wages in some sectors where wages are depressed (such as in the ‘education’, ‘arts, entertainment and recreation’, ‘professional, scientific and technical activities’, and ‘wholesale and retail trade’ sectors), as well as the starting salaries of graduates. The key method for Taiwan to do so is by raising the minimum wage in order to boost overall wage growth, as South Korea and Lithuania have done.

Finally, while Taiwan’s wages are currently better than China, Taiwan’s government should be watchful that China’s average wages were rising rapidly prior to its current economic downturn, and it should ensure that the minimum wage in Taiwan grows faster to uplift wages in general, if it wants to continue to stay ahead of China. 

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In the second part of this article, we compare Taiwan and China’s wages after accounting for taxes and social security, and housing rents and prices, as well as other work conditions, to assess the welfare of Taiwan’s workers relative to China’s.

(Featured photo by Timo Volz on Pexels)