BOFIT Viikkokatsaus / BOFIT Weekly 2018/45

China’s National Bureau of Statistics reports that disposable incomes in urban areas rose by 8 % y-o-y in the first nine months of this year. Income gains have held steady for several years now. Gains in real incomes dropped below 6 % y-o-y. Wages, the most important income category, witnessed increases in line with overall income gains.

The NBS also found that household consumer spending in urban areas distinctly lagging wage gains. Household consumption rose by just 4 % y-o-y in January-September, and was reflected in lower retail sales growth. Chinese households are legendary savers, so bank deposits have seen healthy growth again this year. On the other hand, household debt-servicing costs have also climbed rapidly as households have taken on substantial debt in this decade.

In addition to the income divide between cities and rural areas, income differences vary considerably among cities. In the first nine months of this year, the monthly disposable incomes of city-dwellers averaged 3,300 yuan (420 euros), while rural incomes averaged about a third of that. Shanghai posted the highest average urban income level (5,000 yuan a month), while Gansu was at the bottom (2,000 yuan). Price levels also vary considerably across China.

Some cautious estimates of wage trends contrast with the rosy official picture. Zhaopin, a company that matches jobseekers and employers online, reports very modest increases in wages for white-collar workers. Its third-quarter figures show an average rise in real wages of 1 % y-o-y.