World Economy

China Should Slow Wage Growth to Stay Competitive

China Should Slow Wage Growth to Stay CompetitiveChina Should Slow Wage Growth to Stay Competitive

China should slow down the pace of wage increases in order to maintain competitiveness, human resources vice minister Xin Changxing said on Friday, as reported by

Several Chinese provinces have slowed or halted rises to the minimum wage, as Chinese companies face pressure from rising expenses and weakening demand. The government is also looking to lower the social benefit cost burden on companies.

Lower wage growth could also help Chinese companies better compete with overseas low-cost centers for export orders.

Despite rising labor costs, China continued to gain global export market share last year.

Chinese wages grew faster than the economy over much of the past decade, lifting workers’ living standards but also diminishing China’s competitive edge, particularly when compared with other developing Asian countries that rely on low-wage manufacturing.

“Our advantage in labor costs is no longer as clear-cut as before,” Mr. Xin said. “We should ease the frequency and scale of wage increases so as to preserve our competitive advantage.”

The slowdown is already under way in terms of minimum-wage growth. Six provinces and municipalities raised their minimum wages by an average of 11% in the first half of this year, compared with the 13 regions that did so by an average of 13.5% from January to June 2015, Mr. Xin said.