China's wage and income data, Confidence improving?
Trying to make sense of things
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We look at three of China’s wage and income growth indicators. This year, they point to robust household income growth, though expenditures are growing faster. Spending on services is high this year and should level out in the next 4 quarters as lockdown disruptions are lapped. Broadly speaking, Chinese “average” consumer could see a mild recovery, but it won’t be evenly distributed, meaning there’s plenty to pick apart for consumer sub-sector read-through.
“Success covers many blunders.” - George Bernard Shaw
I. Measures of Chinese wage and income growth
There’s no good (official) wage data in China. There’s no monthly or weekly data on wages, hours worked, or hourly earnings—making it difficult to get a grasp on changes in the labor market.
China’s Official Wage and Income Data
China’s NBS produces (and releases publicly) several measures of wages and incomes.
1/ Quarterly Household Survey
The most frequent series is a quarterly household survey which provides a per capita disposable income and household expenditures. It is summarized by nationwide, urban, rural and each province. This series is built on surveys of 160,000 households across all 31 provinces.
2/ Annual Average Wages of Employed Persons
There is also an annual series of average gross wages (pre-tax and inclusive of reimbursed expenses) of employed persons. We believe the series is overly weighted towards the State economy (read more about State vs. Private economies of China) because SOEs account for 36% of total (2022), while they only employ 15% of the total labor force.
Since June 2010 the series is broken into the urban “non-private” and “private” work units. Non-private doesn’t mean “public”, it means large firms: SOEs, listed companies, joint-stock companies, foreign invested companies, among others. Private means smaller firms, but over 20 employees.
3/ Migrant labor survey (quarterly, full report released annually)
Finally there is the migrant labor survey of around 280,000 migrant workers, which includes an average monthly wage. The survey is conducted quarterly and the average monthly salary is mentioned in a press release/speech but the bigger report is only released annually.
Charting the different measures
Let’s take a look at the 2022 and H1’2023 growth levels for these various measures of wages and incomes.
Here we see urban workers at large firms (non-private units) experienced the highest wage growth, +6.7% in average annual wages—not bad! Urban residents at smaller firms (private units), on the other had, only got +3.7%.