How to Calculate Salary in China?

Chi­na is one of the world’s largest and fastest-grow­ing economies, and it offers many oppor­tu­ni­ties for for­eign investors and pro­fes­sion­als. How­ev­er, doing busi­ness or work­ing in Chi­na also comes with many chal­lenges, such as under­stand­ing the com­plex and dynam­ic tax and social secu­ri­ty sys­tem, com­ply­ing with the local reg­u­la­tions and require­ments, and man­ag­ing the pay­roll and ben­e­fits for employees.

One of the most impor­tant aspects of pay­roll man­age­ment in Chi­na is salary cal­cu­la­tion. Salary cal­cu­la­tion in Chi­na involves var­i­ous fac­tors, such as gross salary, net salary, indi­vid­ual income tax (IIT), social insur­ance con­tri­bu­tions, hous­ing fund con­tri­bu­tions, allowances, bonus­es, over­time pay, etc. Salary cal­cu­la­tion in Chi­na can be com­pli­cat­ed and con­fus­ing for both employ­ers and employ­ees, espe­cial­ly for for­eign­ers who are not famil­iar with the Chi­nese system.

In this arti­cle, we will pro­vide a com­pre­hen­sive guide on how to cal­cu­late salary in Chi­na, explain the main com­po­nents and for­mu­las of salary cal­cu­la­tion, and offer some prac­ti­cal tips and tools for salary cal­cu­la­tion. We will also pro­vide some infor­ma­tion on the aver­age salary in Chi­na and the min­i­mum wage stan­dards in dif­fer­ent regions.

What are the main components of salary calculation in China?

Salary cal­cu­la­tion in Chi­na con­sists of sev­er­al com­po­nents, such as:

• Gross salary: This is the total amount of mon­ey that an employ­ee earns before any deduc­tions, such as tax­es and social insur­ance con­tri­bu­tions. Gross salary includes basic salary, allowances, bonus­es, over­time pay, etc.
• Net salary: This is the amount of mon­ey that an employ­ee actu­al­ly receives after all deduc­tions, such as tax­es and social insur­ance con­tri­bu­tions. Net salary is also known as take-home pay or dis­pos­able income.
• Indi­vid­ual income tax (IIT): This is the tax that an employ­ee pays on their income from employ­ment or oth­er sources. IIT is cal­cu­lat­ed based on the tax­able income of an employ­ee, which is the gross salary minus a stan­dard deduc­tion of 5,000 yuan per month and any spe­cial deduc­tions or exemp­tions that an employ­ee may be eli­gi­ble for. IIT is levied at pro­gres­sive rates rang­ing from 3 per­cent to 45 percent.
• Social insur­ance con­tri­bu­tions: These are manda­to­ry pay­ments that both employ­ers and employ­ees make to the social insur­ance sys­tem in Chi­na, which cov­ers five types of insur­ance: pen­sion, med­ical, unem­ploy­ment, work-relat­ed injury, and mater­ni­ty. The social insur­ance con­tri­bu­tion rates vary by region and by type of insur­ance. Gen­er­al­ly speak­ing, employ­ers pay more than employ­ees for social insur­ance contributions.
• Hous­ing fund con­tri­bu­tions: These are manda­to­ry sav­ings that both employ­ers and employ­ees make to the hous­ing fund sys­tem in Chi­na, which pro­vides loans and sub­si­dies for hous­ing pur­chas­es or rentals. The hous­ing fund con­tri­bu­tion rates vary by region but are usu­al­ly set at 12 per­cent of the employ­ee’s gross salary. Both employ­ers and employ­ees con­tribute equal­ly to the hous­ing fund.

The fol­low­ing table shows an exam­ple of how these com­po­nents are cal­cu­lat­ed for an employ­ee with a gross salary of 10,000 yuan per month in Beijing:

Com­po­nent	Amount (yuan)
Gross salary	10,000
- IIT (3% rate)	- 150
- Social insur­ance con­tri­bu­tions (employ­ee portion)	- 1,020
- Hous­ing fund con­tri­bu­tions (employ­ee portion)	- 600
Net salary (take-home pay)	8,230
+ Social insur­ance con­tri­bu­tions (employ­er portion)	+ 2,940
+ Hous­ing fund con­tri­bu­tions (employ­er portion)	+ 600
Total employ­er cost (gross salary + employ­er contributions)	13,540

As you can see from the table, the net salary of the employ­ee is 8,230 yuan, which is 82.3 per­cent of the gross salary. The total employ­er cost is 13,540 yuan, which is 35.4 per­cent high­er than the gross salary. The employ­ee pays 1,770 yuan in tax­es and social insur­ance con­tri­bu­tions, while the employ­er pays 3,540 yuan in social insur­ance and hous­ing fund contributions.

What are the formulas for salary calculation in China?

Salary cal­cu­la­tion in Chi­na can be done using the fol­low­ing formulas:

Gross salary = Basic salary + Allowances + Bonus­es + Over­time pay + Oth­er income

This for­mu­la cal­cu­lates the total amount of mon­ey that an employ­ee earns before any deduc­tions. The basic salary is the fixed month­ly pay­ment that an employ­ee receives for their work. The allowances are the extra pay­ments that an employ­ee receives for cer­tain expens­es or con­di­tions, such as hous­ing, trans­porta­tion, meals, trav­el, etc. The bonus­es are the extra pay­ments that an employ­ee receives for their per­for­mance or achieve­ments, such as annu­al bonus, com­mis­sion, etc. The over­time pay is the extra pay­ment that an employ­ee receives for work­ing beyond their nor­mal work­ing hours. The oth­er income is any oth­er income that an employ­ee receives from their employ­ment or oth­er sources, such as tips, div­i­dends, inter­est, etc.

Net salary = Gross salary – IIT – Social insur­ance con­tri­bu­tions – Hous­ing fund con­tri­bu­tions – Oth­er deductions

This for­mu­la cal­cu­lates the amount of mon­ey that an employ­ee actu­al­ly receives after all deduc­tions. The IIT is the tax that an employ­ee pays on their income from employ­ment or oth­er sources. The social insur­ance con­tri­bu­tions are the manda­to­ry pay­ments that both employ­ers and employ­ees make to the social insur­ance sys­tem in Chi­na, which cov­ers five types of insur­ance: pen­sion, med­ical, unem­ploy­ment, work-relat­ed injury, and mater­ni­ty. The hous­ing fund con­tri­bu­tions are the manda­to­ry sav­ings that both employ­ers and employ­ees make to the hous­ing fund sys­tem in Chi­na, which pro­vides loans and sub­si­dies for hous­ing pur­chas­es or rentals. The oth­er deduc­tions are any oth­er deduc­tions that an employ­ee may have to pay from their gross salary, such as union fees, fines, etc.

Total employ­er cost = Gross salary + Social insur­ance con­tri­bu­tions (employ­er por­tion) + Hous­ing fund con­tri­bu­tions (employ­er portion)

This for­mu­la cal­cu­lates the total amount of mon­ey that an employ­er pays to employ an employ­ee, includ­ing the gross salary and the employ­er’s con­tri­bu­tions to the social insur­ance and hous­ing fund sys­tems. The total employ­er cost reflects the actu­al labor cost for the employer.

What are some tips and tools for salary calculation in China?

Salary cal­cu­la­tion in Chi­na can be chal­leng­ing and time-con­sum­ing, espe­cial­ly for for­eign employ­ers and employ­ees who are not famil­iar with the Chi­nese sys­tem. Here are some tips and tools that can help you with salary cal­cu­la­tion in China:

• Use online salary cal­cu­la­tors: There are many online salary cal­cu­la­tors that can help you esti­mate the net salary, IIT, social insur­ance con­tri­bu­tions, hous­ing fund con­tri­bu­tions, and total employ­er cost for dif­fer­ent regions and sce­nar­ios in Chi­na. For exam­ple, you can use the Chi­na Salary Cal­cu­la­tor by Direct HR, the Chi­na Salary Cal­cu­la­tor by HROne, or the Chi­na Pay­roll Cal­cu­la­tor by Chi­na Brief­ing. These cal­cu­la­tors are easy to use and can pro­vide you with a quick and accu­rate esti­mate of your salary cal­cu­la­tion in China.
• Con­sult with pro­fes­sion­al ser­vice providers: If you need more com­pre­hen­sive and cus­tomized assis­tance with salary cal­cu­la­tion in Chi­na you can con­tact us at YouWin Con­sult­ing, a lead­ing con­sult­ing firm that pro­vides a full range of ser­vices for for­eign investors and pro­fes­sion­als in Chi­na, such as com­pa­ny reg­is­tra­tion, visa appli­ca­tion, account­ing and tax­a­tion, pay­roll and ben­e­fits, recruit­ment, etc. YouWin Con­sult­ing can help you with salary cal­cu­la­tion in Chi­na and ensure that you com­ply with the local reg­u­la­tions and requirements.
• Keep updat­ed with the lat­est changes and trends: Salary cal­cu­la­tion in Chi­na is sub­ject to fre­quent changes and adjust­ments due to the dynam­ic eco­nom­ic and social envi­ron­ment in Chi­na. There­fore, it is impor­tant to keep updat­ed with the lat­est changes and trends in salary cal­cu­la­tion in Chi­na, such as the changes in IIT rates and brack­ets, the changes in social insur­ance con­tri­bu­tion rates and bases, the changes in min­i­mum wage stan­dards and aver­age wage lev­els, etc. You can fol­low reli­able and high-qual­i­ty sources that pro­vide time­ly and rel­e­vant infor­ma­tion on salary cal­cu­la­tion in Chi­na, such as the State Tax­a­tion Admin­is­tra­tion, the Min­istry of Human Resources and Social Secu­ri­ty, or the Nation­al Bureau of Sta­tis­tics. You can also sub­scribe to newslet­ters or blogs that offer insights and analy­sis on salary cal­cu­la­tion in Chi­na, such as Chi­na Brief­ing, JSC Group Blog, or HROne Blog. By stay­ing informed and updat­ed, you can avoid poten­tial risks and errors in salary cal­cu­la­tion in China.

What is the average salary in China?

The aver­age salary in Chi­na refers to the aver­age wage of income obtained by divid­ing the total wage of all work­ers in a giv­en area for a giv­en year by the num­ber of work­ers employed dur­ing that time peri­od. Accord­ing to the Chi­na Sta­tis­ti­cal Year­book 2021, the aver­age annu­al salary of employ­ees in non-pri­vate urban units in Chi­na was 106,837 yuan in 2020, which was 9.8 per­cent high­er than the pre­vi­ous year. The aver­age annu­al salary of employ­ees in pri­vate urban units in Chi­na was 56,920 yuan in 2020, which was 7.6 per­cent high­er than the pre­vi­ous year.

How­ev­er, the aver­age salary in Chi­na varies sig­nif­i­cant­ly by region, indus­try, and sec­tor. For exam­ple, accord­ing to the same source, the aver­age annu­al salary of employ­ees in non-pri­vate urban units in Bei­jing was 194,651 yuan in 2020, which was the high­est among all regions in Chi­na, while the aver­age annu­al salary of employ­ees in non-pri­vate urban units in Henan was 66,836 yuan in 2020, which was the low­est among all regions in Chi­na. Sim­i­lar­ly, the aver­age annu­al salary of employ­ees in non-pri­vate urban units in the infor­ma­tion trans­mis­sion, soft­ware and infor­ma­tion tech­nol­o­gy ser­vices indus­try was 201,500 yuan in 2020, which was the high­est among all indus­tries in Chi­na, while the aver­age annu­al salary of employ­ees in non-pri­vate urban units in the agri­cul­ture, forestry, ani­mal hus­bandry and fish­ery indus­try was 53,800 yuan in 2020, which was the low­est among all indus­tries in Chi­na. More­over, the aver­age annu­al salary of employ­ees in non-pri­vate urban units was much high­er than that of employ­ees in pri­vate urban units across all regions and indus­tries in China.

The fol­low­ing table shows the aver­age annu­al salary of employ­ees in non-pri­vate and pri­vate urban units by region and indus­try in Chi­na in 2020:

Region/​Industry	Aver­age annu­al salary (yuan)
	Non-pri­vate urban units	Pri­vate urban units
Nation­al Average	106,837	56,920
Bei­jing	194,651	83,301
Shang­hai	191,844	82,686
Tibet	140,355	64,596
Tian­jin	123,528	65,245
Zhe­jiang	122,309	63,996
Guang­dong	118,133	60,934

The aver­age salary in Chi­na also depends on the sec­tor and own­er­ship of the employ­er. Accord­ing to the Chi­na Sta­tis­ti­cal Year­book 2021, the aver­age annu­al salary of employ­ees in state-owned urban units in Chi­na was 114,000 yuan in 2020, which was 6.7 per­cent high­er than the nation­al aver­age of non-pri­vate urban units. The aver­age annu­al salary of employ­ees in col­lec­tive-owned urban units in Chi­na was 69,000 yuan in 2020, which was 35.4 per­cent low­er than the nation­al aver­age of non-pri­vate urban units. The aver­age annu­al salary of employ­ees in for­eign-fund­ed and Hong Kong, Macao and Tai­wan-fund­ed urban units in Chi­na was 108,000 yuan in 2020, which was 1.7 per­cent high­er than the nation­al aver­age of non-pri­vate urban units. The aver­age annu­al salary of employ­ees in pri­vate urban units in Chi­na was 56,900 yuan in 2020, which was 46.8 per­cent low­er than the nation­al aver­age of non-pri­vate urban units.

The fol­low­ing table shows the aver­age annu­al salary of employ­ees by sec­tor and own­er­ship of urban units in Chi­na in 2020:

Sector/​Ownership	Aver­age annu­al salary (yuan)
Nation­al Aver­age (Non-pri­vate urban units)	106,837
Pri­ma­ry Indus­try (Non-pri­vate urban units)	53,800
Sec­ondary Indus­try (Non-pri­vate urban units)	88,000
Ter­tiary Indus­try (Non-pri­vate urban units)	115,000
State-owned urban units	114,000
Col­lec­tive-owned urban units	69,000

The aver­age salary in Chi­na also reflects the lev­el of eco­nom­ic devel­op­ment and liv­ing stan­dards in dif­fer­ent regions and indus­tries. Accord­ing to the Chi­na Sta­tis­ti­cal Year­book 2021, the per capi­ta dis­pos­able income of urban res­i­dents in Chi­na was 43,834 yuan in 2020, which was 3.8 per­cent high­er than the pre­vi­ous year. The per capi­ta dis­pos­able income of rur­al res­i­dents in Chi­na was 17,131 yuan in 2020, which was 6.9 per­cent high­er than the pre­vi­ous year. The per capi­ta dis­pos­able income of urban res­i­dents was 2.56 times that of rur­al res­i­dents in 2020, which was 0.05 low­er than the pre­vi­ous year. The per capi­ta dis­pos­able income of urban and rur­al res­i­dents in Chi­na also var­ied sig­nif­i­cant­ly by region and indus­try. For exam­ple, accord­ing to the same source, the per capi­ta dis­pos­able income of urban res­i­dents in Shang­hai was 72,232 yuan in 2020, which was the high­est among all regions in Chi­na, while the per capi­ta dis­pos­able income of urban res­i­dents in Guizhou was 28,804 yuan in 2020, which was the low­est among all regions in Chi­na. Sim­i­lar­ly, the per capi­ta dis­pos­able income of rur­al res­i­dents in Bei­jing was 39,229 yuan in 2020, which was the high­est among all regions in Chi­na, while the per capi­ta dis­pos­able income of rur­al res­i­dents in Tibet was 12,995 yuan in 2020, which was the low­est among all regions in China.

What are the minimum wage standards in China?

The min­i­mum wage stan­dards in Chi­na refer to the min­i­mum amount of mon­ey that an employ­er must pay to an employ­ee for their work. The min­i­mum wage stan­dards in Chi­na are set by the local gov­ern­ments at the provin­cial, munic­i­pal, or coun­ty lev­el, based on the local eco­nom­ic and social con­di­tions and the cost of liv­ing. The min­i­mum wage stan­dards in Chi­na are usu­al­ly expressed as a month­ly or hourly rate, and they apply to both full-time and part-time employ­ees. The min­i­mum wage stan­dards in Chi­na are revised peri­od­i­cal­ly to reflect the changes in the local situations.

Accord­ing to the Min­istry of Human Resources and Social Secu­ri­ty, as of Jan­u­ary 2021, there were 27 regions that had announced their min­i­mum wage stan­dards for 2020 or 2021. The high­est month­ly min­i­mum wage stan­dard was 2,480 yuan in Shang­hai, while the low­est month­ly min­i­mum wage stan­dard was 1,120 yuan in Liaon­ing. The high­est hourly min­i­mum wage stan­dard was 24 yuan in Bei­jing, while the low­est hourly min­i­mum wage stan­dard was 11 yuan in Guangxi.

The fol­low­ing table shows the min­i­mum wage stan­dards by region in Chi­na as of Jan­u­ary 2021:

Region	Month­ly min­i­mum wage (yuan)	Hourly min­i­mum wage (yuan)
Shang­hai	2,480	-
Bei­jing	2,200	24
Guang­dong	2,200−1,420	-
Tian­jin	2,050	-
Zhe­jiang	2,010−1,710	-

The min­i­mum wage stan­dards in Chi­na are intend­ed to pro­tect the basic liv­ing stan­dards of the low-income work­ers and to pro­mote the bal­anced devel­op­ment of the econ­o­my and soci­ety. How­ev­er, the min­i­mum wage stan­dards in Chi­na are not uni­form across the coun­try, and they may not reflect the actu­al mar­ket con­di­tions and labor demand in dif­fer­ent regions and indus­tries. There­fore, employ­ers and employ­ees should nego­ti­ate and agree on a rea­son­able and fair wage lev­el that is high­er than the min­i­mum wage stan­dards in China.

Conclusion

Salary cal­cu­la­tion in Chi­na is a com­plex and dynam­ic process that involves var­i­ous fac­tors, such as gross salary, net salary, indi­vid­ual income tax, social insur­ance con­tri­bu­tions, hous­ing fund con­tri­bu­tions, allowances, bonus­es, over­time pay, etc. Salary cal­cu­la­tion in Chi­na can be done using some for­mu­las and online tools, but it also requires con­stant updates and adjust­ments due to the changes in the local reg­u­la­tions and con­di­tions. Salary cal­cu­la­tion in Chi­na also varies sig­nif­i­cant­ly by region, indus­try, sec­tor, and own­er­ship, reflect­ing the diver­si­ty and dis­par­i­ty of the eco­nom­ic and social devel­op­ment in Chi­na. Salary cal­cu­la­tion in Chi­na is an impor­tant aspect of pay­roll man­age­ment and human resources in Chi­na, and it affects both employ­ers and employ­ees in terms of their costs, ben­e­fits, and satisfaction.

We hope that this arti­cle has pro­vid­ed you with a com­pre­hen­sive guide on how to cal­cu­late salary in Chi­na, and helped you under­stand the main com­po­nents and for­mu­las of salary cal­cu­la­tion, as well as some tips and tools for salary cal­cu­la­tion. We also hope that this arti­cle has giv­en you some infor­ma­tion on the aver­age salary and the min­i­mum wage stan­dards in Chi­na, and how they dif­fer by region and indus­try. If you need more assis­tance or guid­ance on salary cal­cu­la­tion in Chi­na, or any oth­er aspects of doing busi­ness or work­ing in Chi­na, please feel free to con­tact us at YouWin Con­sult­ing, and we will be hap­py to help you.

Frequently Asked Questions

Here are some com­mon ques­tions that users might have about salary cal­cu­la­tion in Chi­na, and our answers to them:

Sources:

1. Chi­na Sta­tis­ti­cal Year­book 2021 | Nation­al Bureau of Statistics
2. 关于公布 2020 年度全国各省、自治区、直辖市最低工资标准的情况的通知 | Min­istry of Human Resources and Social Security
3. Chi­na Salary Cal­cu­la­tor | Direct HR
4. Chi­na Salary Cal­cu­la­tor | HROne
5. Chi­na Pay­roll Cal­cu­la­tor | Chi­na Briefing