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China issues pay raises for China’s 39 million government employees


China issues pay raises for China’s 39 million government employees

Chinese Bank Notes

Yuan Bank Notes

As part of China’s ongoing raft of structural reforms, the pension structure and funding mechanisms of government pension systems are undergoing an overhaul. While the details haven’t been fully released, the overhaul does involve government employees paying more of their salaries into their pension fund. Part of the reason for the overhaul is the fact that government employees get bigger monthly average pension payouts than their private sector counterparts. While this is largely due to the fact that there’s less private employer contributions required, this divide has nonetheless caused concern in the inner circles of the Community Party. The Party is very sensitive to any source of potential resentment or discontent as it tries to remain relevant within a bustling capitalist economic system.

As part of the overhaul, China’s 39 million government employees-from national to provincial to local employees-will get pay raises. Initial estimates peg the raises to be no less than 60%. While the increase does make for a very optimistic headline and cause for joy, the truth is that most of the raise will be eaten up by the amount of yuan state employees have to pay into their pension funds. Still, according to some estimates, some state employees will actually enjoy a surplus. This is a positive development since it acts as a stimulus given the large number of employees affected by the pay raise. Regardless, China observers should note this development as yet another sign that the central government is serious about reforming key elements of the Chinese bureaucratic and economic system.


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