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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 208

China Business Intelligence No. 208

Samsung Economic Research Institute Beijing Office

Nov. 14, 2011

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According to surveys, the wage increase rate in main industries in the first half of 2011 was below inflation rate. The main short-term reasons were slow economic growth and food price hikes while the long-term reasons included the economic development model’s dependence on low costs, high tax burden and low export prices. The tax included in product prices in China is much higher than other countries while low export prices have also raised inflation, adding to the burden on the Chinese people. Wage rises are inevitable, as China faces pressure to transform the current economic development model which depends on the low-wage labor force. For resolution, the government should take measures controlling inflation and relieving tax burdens and enhance the effects of income distribution.

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