MANUFACTURING EMPLOYMENT AND COMPENSATION IN CHINA 

By Judith Banister* 

Beijing Javelin Investment Consulting Company 

November 2005 

This paper was written under contract to the U.S. Department of Labor, Bureau of Labor 

Statistics. The views expressed are those of the author and do not necessarily reflect the 

views of the Bureau of Labor Statistics (BLS). A preliminary version of this report, 

dated December 2004, was posted here previously. The current version incorporates the 

results of new research by the author, including revisions to the estimates of China’s 

hourly compensation costs. This report formed the basis for two articles published in the 

July and August 2005 issues of the Monthly Labor Review. These articles can be 

accessed on the Internet as follows: 

“Manufacturing employment in China:” 

http://www.bls.gov/opub/mlr/2005/07/art2full.pdf

“Manufacturing earnings and compensation in China:” 

http://www.bls.gov/opub/mlr/2005/08/art3full.pdf

Peer reviews of this work were conducted both within BLS and externally by persons 

with expert knowledge of China. See the acknowledgments on the next page for further 

information on these reviews. The opinions, analysis, and conclusions expressed in this 

report are solely those of the author; any mistakes or errors remain the author’s 

responsibility. 

* Judith Banister is a consultant working with Javelin Investments in Beijing, China. She 

is former head of the International Programs Center at the U.S. Census Bureau. E-mail: 

Judith_Banister@yahoo.com 
Acknowledgments 

This report was written under contract to the U.S. Department of Labor, Bureau of Labor 

Statistics, in order to further the knowledge of China’s manufacturing earnings and labor 

compensation statistics. The views expressed are those of the author and do not reflect 

the views of the Bureau. This research project has benefited from the valuable feedback 

of colleagues in China and in other countries on China’s economy and Chinese business 

practices. In particular, economists Loraine A. West and Nicholas R. Lardy served as 

expert discussants at a November 2004 BLS seminar on an early draft of this report. 

Official statistical organizations in China have helped to correct some errors and point 

toward missing pieces of information. BLS economists--in particular, Constance 

Sorrentino, Chris Sparks, Elizabeth Taylor, Aaron Cobet, Susan Fleck, Marie-Claire 

Guillard, Gary Martin, Ann Neff, and Erin Lett--have provided their expertise and 

support. Patricia Capdevielle, formerly of the Bureau of Labor Statistics, provided expert 

advice and comments. I would especially like to thank Xing Yan (LeLe), Xing Shuo, 

Song Jintao, Xing Shuqin, Wang Jianping, Li Fang, Xue Jianwen, and Robert Boyer for 

their dedicated research assistance. 

The opinions, analysis, and conclusions expressed in this report are solely mine; any 

mistakes or errors remain my responsibility. 

Judith Banister 

Beijing 

i
Table of Contents 

Acknowledgments i 

List of Tables, Charts, and Exhibit iv 

Preface v 

EXECUTIVE SUMMARY vi 

MANUFACTURING EMPLOYMENT IN CHINA 2 

Background 3 

Recent employment statistics 3 

Structure of manufacturing employment 4 

Reported trends in manufacturing employment 6 

Change in the definition of urban employed 6 

Adjusted trends in manufacturing employment 7 

Data discrepancies 10 

Urban and rural manufacturing workers 12 

A major statistical anomaly 14 

Occupational categories of China’s manufacturing workers 17 

Manufacturing in key export regions 18 

Migrant manufacturing workers 18 

Is China’s labor supply “inexhaustible”? 20 

A global perspective 23 

Summary and conclusions 23 

Future research priorities 25 

MANUFACTURING EARNINGS AND COMPENSATION IN CHINA 26 

Background 28 

The concept of compensation 29 

Reported manufacturing earnings in Chinese currency 30 

Estimating total 2002 compensation in manufacturing 32 

Underreporting of urban manufacturing employment and earnings 34 

Annual dollar compensation for manufacturing workers 35 

Monthly labor compensation in manufacturing 36 

Annual hours worked in manufacturing 36 

Hourly labor compensation in manufacturing 38 

Purchasing power of take-home earnings for manufacturing workers 39 

Manufacturing labor compensation in key export regions 41 

Earnings of migrant manufacturing workers 42 

Manufacturing earnings over time 43 

Estimates of manufacturing employee compensation 44 

Labor compensation costs and China’s competitiveness 45 

Additional sources of China’s competitiveness in manufacturing 47 

China’s Domestic Market 47 

Convenient logistics in coastal regions of China 48 

Low Price of Land 49 

Incentive policies to promote foreign investment in China 49 

ii
Relatively stable political situation 50 

What hampers China’s competitiveness in manufacturing? 50 

China is easy to enter but very difficult to leave 50 

Electric power shortages 51 

Raw material shortages 51 

Lack of patent, trademark, and copyright protection 51 

Conclusions 52 

Endnotes 53 

Tables, Charts, and Exhibit 69 

Glossary and Definitions 86 

iii
List of Tables, Charts, and Exhibit 

Tables 

Table 1 Official reported manufacturing employment in China, 

yearend 1978-2002 69 

Table 2 Manufacturing employment excluding surplus laid-off 

manufacturing workers in China, yearend 1995-2002 70 

Table 3 Employment in China: comparison of census and enterprise 

data, 2000 71 

Table 4 Manufacturing employment in China: two alternative series, 

yearend 1990-2002 72 

Table 5 Manufacturing employment in G7 countries, 1995-2002 73 

Table 6 Published earnings of manufacturing employees in China, 

2002 74 

Table 7 Urban manufacturing employment and earnings by subsector 

in China, 2002 75 

Table 8 Estimated labor compensation of manufacturing employees in 

China, 2002 76 

Table 9 Compensation of urban manufacturing employees and TVE 

industry employees, Yangtze Delta provinces and Guangdong, 

China, 2002 77 

Table 10 Annual percent change in average real (price-adjusted) 

earnings of urban manufacturing staff and workers in China, 

selected years, 1979-2002 78 

Table 11 Average annual real earnings of urban manufacturing staff and 

workers in China, 1990-2002 79 

Charts and Exhibit 

Chart 1 Structure of manufacturing employment in China, yearend 

2002 80 

Chart 2 Manufacturing employment in China, yearend 1990-2002 81 

Chart 3 Employment by sector in the United States and China, 2002, in 

percent 82 

Chart 4 Average hourly compensation costs of manufacturing workers, 

selected economies and regions, 2002 83 

Chart 5 Average real earnings of urban manufacturing staff and 

workers in China, 1990-2002 84 

Exhibit 1 Components of Chinese urban earnings statistics 85 

iv
Preface 

This 2005 report is an expanded, updated, refined, and further refereed version of the 

author’s original report, which was posted on the BLS website as of the end of 2004. The 

first section of the current report, “Manufacturing Employment in China,” is a much 

expanded version of the article of the same name published in the Monthly Labor Review, 

July 2005 issue, and posted separately on this website. The second section of this report, 

“Manufacturing Earnings and Compensation in China,” is a significantly expanded 

version of the article of the same name published in the Monthly Labor Review, August 

2005 issue, which is also posted on this BLS website. Material in this report that is not 

found in the two MLR articles includes the Executive Summary and Table of Contents, 

the section on occupational categories of China’s manufacturing employees, the section 

“Is China’s labor supply inexhaustible?”, the section discussing the many sources of the 

competitiveness of China’s manufacturing enterprises, a section on factors that hamper 

China’s competitiveness in manufacturing, estimation of the take-home pay of China’s 

manufacturing employees calculated using the purchasing power parity (PPP) exchange 

rate, and the Glossary and Definitions section in the Appendix. 

v
EXECUTIVE SUMMARY 

 The goals of this report are to assess the quality and usability of available 

statistics on China’s manufacturing employment and labor compensation for the most 

recent available year and for the period since 1990 and, if possible, to estimate annual, 

monthly, and hourly labor compensation for China’s manufacturing employees. The 

report shows that China has released just enough relevant data on annual average wages 

and labor-related employer expenditures to derive 2002 estimates of annual labor 

compensation for 30 million city manufacturing employees and 71 million non-city 

manufacturing employees, that is, those working in village and town enterprises. 

Combining the published and adjusted labor compensation figures for these two groups 

results in an approximation of average 2002 labor compensation per manufacturing 

employee in China. Because China has not systematically collected and reported 

adequate data on actual hours worked by manufacturing employees in 2002, or for any 

full year, this report uses published partial information and a set of hypotheses to estimate 

annual hours worked by city and noncity manufacturing employees, thus calculating 

reasonable approximations of average 2002 hourly labor compensation in manufacturing 

for these two categories of manufacturing employees and for China as a whole. Labor 

compensation estimates are converted into U.S. dollars at the 2002 prevailing commercial 

exchange rate, resulting in the estimate that China’s manufacturing employees in 2002 

received approximately U.S.$0.57 in total labor compensation per hour of work. Cash 

income of China’s manufacturing workers is also estimated in international purchasing 

power parity (PPP) dollars to give a sense of the real purchasing power of the pay of 

China’s manufacturing employees in their own domestic economy. 

 Much of this report is focused on discussing issues of data quality and serious 

problems of incompleteness of the available data and excessive focus of published 

statistics on city manufacturing employees to the near-exclusion of data on the more 

numerous manufacturing employees working outside the administrative boundaries of 

cities. Even within the cities, China’s Ministry of Labor and Social Security and the 

National Bureau of Statistics focus their data collection and reporting on the rapidly 

declining state-owned and urban collective-owned manufacturing enterprises, while not 

yet adequately expanding their efforts to collect statistics on the thriving, growing, 

dynamic private manufacturing sector. Outside city boundaries, where most of China’s 

manufacturing employees are working, collection and reporting of statistics seems to be 

the job of the Ministry of Agriculture and its sub-unit on village and town enterprises 

(TVE’s). This division of statistical responsibility is a holdover from the command 

economy of the pre-1978 period. It results in the near-absence of reported statistics on the 

numbers and labor compensation of manufacturing workers in China’s industrial parks, 

suburbs, towns, rural areas, and any other concentrations of manufacturing enterprises 

and suppliers that are located outside city boundaries. 

 Data on manufacturing employees and their wages in China come from regular 

administrative reporting systems that are supposed to cover all employees, rather than 

from labor surveys as in most developed countries. This report compares these 

vi
administrative figures with other sources of data on manufacturing employee numbers 

and the urban-rural distribution of manufacturing workers, including the 1995 industrial 

census of China and especially the population census of November 1, 2000. The 2000 

census gives the occupational breakdown of PRC manufacturing workers and the 

distribution of manufacturing workers by number of days worked in the week before the 

census, which are reported and discussed here. 

The author also assesses the probable biases in China’s statistics on numbers of 

manufacturing workers and their wages. The report argues that city manufacturing 

enterprises in particular have powerful incentives to underreport the number of their 

manufacturing employees and especially the compensation of any employees whose work 

is reported. The main purposes of the underreporting of employee numbers, wages, and 

total labor compensation are avoidance of taxes and minimization of required employer 

payments to social insurance and employee housing funds administered by urban 

authorities. 

 This report demonstrates that manufacturing employment in China increased 

during the 1980s and early 1990s, peaked in about 1995-1996, declined during the late 

1990s until 2000-2001, and increased again in 2002. The genuine declines in China’s 

manufacturing employment in the late 1990s were caused by restructuring and 

privatization of state-owned and urban collective-owned factories in the cities, which 

brought about massive layoffs of urban manufacturing workers and sharp increases in 

manufacturing labor productivity. Private sector manufacturing has thrived in both urban 

and rural areas in the late 1990s and the early 21st century. These factories are more 

productive than state-owned and collective-owned factories and are competitive in the 

domestic and global economies. The renewed increase in China’s manufacturing 

employment that began in 2002 or before is fueled by private corporations and 

businesses, both foreign-funded and domestically-owned. 

 As demonstrated in this report, the numbers published in the global and U.S. 

popular media on the low compensation of China’s manufacturing workers are in the 

ballpark of reasonable estimates. The author discusses factors that make China especially 

competitive in manufacturing for the global market, and some factors that are reducing 

and hampering China’s competitiveness. China is indeed an extremely low-wage 

manufacturing environment, and China also benefits from other advantages that give this 

country a competitive edge over many other possible manufacturing locations around the 

world, including low land prices, big concentrations of low-cost parts suppliers, a 

relatively stable and safe political situation, tax and regulatory policies that promote 

foreign direct investment in manufacturing, and China’s own huge potential and actual 

domestic market for manufactured goods. 

vii
Manufacturing Employment and Labor Compensation in China 

The scale of manufacturing employment in China dwarfs that in other countries; China’s 

manufacturing sector has shed surplus workers from inefficient state-owned factories, 

while increasing employment in the private sector. On the basis of published earnings 

data, estimated compensation ratios, and estimated hours, China’s manufacturing 

employees averaged about 57 cents compensation per hour worked in 2002; there was 

wide variation between urban and rural workers. 

Judith Banister* 

November 2005 

* Judith Banister is a consultant working with Javelin Investments in Beijing, China. She 

is former head of the International Programs Center at the U.S. Census Bureau. E-mail: 

Judith_Banister@yahoo.com 

1
MANUFACTURING EMPLOYMENT IN CHINA 

In recent decades, China has become a manufacturing powerhouse. The country’s official 

data showed 83 million manufacturing employees in 2002, but that figure is likely to be 

understated; the actual number was probably closer to 109 million. By contrast, in 2002, 

the Group of Seven (G7) major industrialized countries had a total of 53 million 

manufacturing workers. In the late 1990s through the year 2000, China saw declining 

numbers of manufacturing workers, caused by restructuring and the privatization of 

State-owned and urban collective-owned factories in the cities. Both massive layoffs of 

urban manufacturing workers and sharp increases in manufacturing labor productivity 

ensued. Since then, private-sector manufacturing has thrived in both urban and rural areas 

of China. The reorganized factories are more productive than State-owned and collectiveowned factories and are competitive in the domestic and global economies. China’s 

manufacturing employment began to rise again after 2000, regaining the upward trend of 

the period from 1980 to 1995. 

This report begins with an overview of China’s statistical system, including a 

description of the sources of data used in the analysis presented. Three main sources of 

statistics on China’s manufacturing employment are compared and contrasted, and a 

hybrid data series is derived that helps evaluate Chinese manufacturing employment 

levels and trends from 1990 through 2002. The probable biases in China’s statistics on 

the country’s numbers of manufacturing workers are assessed, both at the national level 

and in the key export-manufacturing zones. 

The analysis emphasizes issues of data quality and the remaining legacies of the 

command economy reflected in China’s labor statistics. Among the factors included is 

the excessive focus of China’s published statistics on city manufacturing employees, to 

the near exclusion of detailed data on the more numerous manufacturing employees 

working outside the administrative boundaries of cities. Even within the cities, data 

collection and reporting remain concentrated on the rapidly declining state-owned and 

urban collective-owned manufacturing enterprises, giving short shrift to the not yet 

adequately collected or published statistics on the thriving, growing, dynamic private 

manufacturing sector. A major reason for China’s statistical neglect of the private sector 

is that the dominance of private and corporate businesses in today’s economy does not fit 

easily into Marxist theory or Mao Zedong’s ideology. 

Because of the many data limitations, a great deal of uncertainty remains in the 

work presented here. A more exacting analysis awaits new and better data collection and 

more detailed metadata from China’s statistical system. 

The analysis in the current report refers to the People’s Republic of China 

(mainland China; hereinafter, “China”) and excludes statistics for Hong Kong, Macao, 

and Taiwan. Occasionally, Chinese terminology will be used, because the standard 

English translations of the terms are misleading or ambiguous and in some cases because 

there is no succinct, accurate English translation of the term. A complete glossary of 

Chinese terms used in this article with their definitions can be found in the Appendix. 

2
Background 

China’s statistical system has been greatly strengthened during the most recent quarter 

century of economic reform.1

 Statisticians in China are steadily learning from 

international practice as promoted by the World Bank, the Asian Development Bank, the 

International Monetary Fund, and the United Nations system. China’s statistical 

organizations endeavor to apply best practices from other countries--especially developed 

countries--to the Chinese economy. Their efforts have been particularly successful in 

China’s population censuses and in some economic and demographic surveys—for 

example, the annual urban and rural household income and consumption surveys. 

Nevertheless, China’s statistical system is still affected by categories and procedures that 

were established during the command economy period before 1978 and never revised. 

Those outdated categories hamper the analysis of levels and trends of economic growth, 

inflation or deflation, employment, wages, and economic change in the urban and rural 

economies. In addition, despite expanding its use of censuses and representative sample 

surveys, China continues to employ the method of regular (usually annual) statistical 

reporting by all production or administrative units as its primary data collection 

instrument. 

Most statistics in China are recorded and collected under the central guidance of 

the National Bureau of Statistics (NBS). According to one source, “The NBS carries the 

responsibility for organizing, directing and coordinating the statistical work throughout 

the country.”2 However, as will be shown later, other ministries have certain statistical 

turf that is their particular responsibility for historical or bureaucratic reasons, and there 

seems to be little coordination among the relevant ministries. For instance, with regard to 

manufacturing employment statistics, the Ministry of Labor and Social Security 

(hereinafter, Labor Ministry) gathers data on most components of the city economies, 

leaving a small, but rapidly growing, segment to the State Administration for Industry 

and Commerce. However, the collection of data and the reporting of statistics on 

manufacturing in rural areas and in towns are left to a part of the Ministry of 

Agriculture.3 

The analysis that follows is based as much as possible on information in Chinese 

sources published by official statistical organizations. The most useful sources turn out to 

be statistical yearbooks from various Government ministries. Later sections of this report 

compile and compare data on China’s manufacturing employment from the 1995 

industrial census and the 2000 population census, as well as administrative data collected 

from manufacturing enterprises and reported annually. The report explains discrepancies 

among the data sets, to the extent possible, and discusses the effects of definitional 

changes on the available official series of manufacturing employment statistics. Strengths 

and weaknesses in the published statistics are highlighted. 

Recent employment statistics 

Employment figures for China are usually confusing and nonstandard. They reflect, in 

part, conventions from the Maoist command economy period from 1949 to 1978, as well 

as new conventions for the semimarket economy of the economic reform period since 

3
1978. The available data also reflect China’s attempts to make its economic statistics 

more internationally comparable. Recent employment statistics are pieced together 

primarily from annual enterprise data. Each enterprise, economic unit, small business, or 

self-employed individual or group is supposed to report employment data each year 

according to its “labor situation” in the previous year and at the previous year’s end. The 

data are then compiled upward in a statistical reporting chain to the national government. 

Enterprise data refer to who is working in what kind of work at the end of the 

relevant year (end of December). The urban enterprise statistical reporting form that is 

required to be submitted to authorities early in a calendar year and that refers to the 

previous calendar year asks enterprises for the “labor situation” (in particular, for the 

“actual situation that year”)--and specifically for the numbers of each category of workers 

at the end of the previous year.4 Accountants or those who report employment and wage 

figures on behalf of their enterprises or other work units (at least those enterprises or 

other work units in urban areas) are given detailed instructions on how to report monthly, 

quarterly, yearend, and annual average figures on employment and wages. The 

instructions are based on regulations released by China’s NBS, especially in 1990 and 

with further clarifications in 1998 and 2002, regarding how to report employment and 

wages.5 

The annually reported figures on total manufacturing employment in China 

include all manufacturing employees: production workers, salaried workers, and 

supervisory workers. China does not show separate data for these groups of workers. 

Table 1 presents figures from China’s annual enterprise reporting system on the numbers 

of employed manufacturing workers in the country from 1978 through 2002, broken 

down into the various categories reported (described in the next section). 

Structure of manufacturing employment 

Chart 1 (based partly on table 1) displays the structure of China’s manufacturing 

employment at the end of 2002, the latest date for which enough statistics are currently 

available. China’s NBS and Labor Ministry published a figure of 83 million 

manufacturing employees in China, of whom 45 million were called rural and 38 million 

were classified as urban. But these data do not take full account of the 71 million town 

and village enterprise (TVE) manufacturing workers reported by the Ministry of 

Agriculture. The TVE category includes large factories in industrial parks outside cities, as 

well as suburban, town, and rural factories.6 On the basis of the reasonable assumption 

that the 38 million urban and 71 million TVE manufacturing employment categories are 

mutually exclusive, the total manufacturing employment at yearend 2002 was about 109 

million, as shown in Chart 1. (This contradiction and its implications are addressed more 

fully later in the report.) Furthermore, there is evidence that the official figure of 83 

million manufacturing workers excludes millions of migrant manufacturing workers. (See 

also later.) 

Of the 38 million urban manufacturing employees at yearend 2002 indicated in 

Chart 1, 30 million were employed in so-called urban manufacturing units (danwei), and 

of these, 29 million were on-post (not laid-off or unemployed) staff and workers. Most of 

these urban manufacturing staff and workers (16 million) were employed by 

4
corporations, joint ventures, and other companies in China’s growing private sector. By 

the end of 2002, manufacturing employment in urban State-owned enterprises had 

dropped steeply, to 10 million, and in urban collective units had declined to only 3 

million. (See table 1.) 

There is considerable overlap between the two categories making up the urban 

manufacturing classification: manufacturing employment in urban units and urban 

manufacturing staff and workers (zhigong). Urban manufacturing staff and workers (all 

of whom have been on-post workers since 1998) are included by definition in the 

category of manufacturing employment in urban units.7

 In every year for which both 

series are available, namely, 1994-2002, the category of manufacturing employment in 

urban units is slightly (0.5-0.7 million) larger than that of urban manufacturing staff and 

workers. (See table 1.) The residual half a million to three-quarters of a million workers 

in urban manufacturing units include urban reemployed former retirees and foreign 

employees of manufacturing units, as well as employees from Hong Kong, Macao, and 

Taiwan.8

For example, at yearend 2002, China recorded 29.807 million employed in urban 

manufacturing units and 29.069 million urban manufacturing staff and workers, the 

difference between the two categories being approximately 738,000. (See table 1 and 

chart 1.9) This residual is accounted for by the category of other urban manufacturing 

employment, with 738,885 reported for yearend 2002, of whom 150,470 were 

reemployed and continuing workers of retirement age.10 Who, then, were the remaining 

588,000 employees in urban manufacturing units? The Labor Ministry clearly has 

collected data on how many of them are foreign personnel, but China Labor Statistical 

Yearbook 2003 does not report this information. (The volume does report that, in all 

sectors of the economy, only 50,045 out of all those in the category of other urban 

employment, totaling 4.28 million, were “Hong Kong, Macao, Taiwan & Foreign 

Personnel” at yearend 2002. This small number implies that the great majority of the 

hundreds of thousands of foreign experts, technical and administrative workers, teachers, 

managers, and entrepreneurs actually working in China have been classified (or 

misclassified) as working in rural areas or are not recorded as working at all.) Therefore, 

only a small proportion of the 0.59 million workers classified as other urban 

manufacturing employees at yearend 2002 could be recorded in the statistics as foreign 

personnel. The rest of the “other” urban manufacturing employees work for urban 

manufacturing enterprises, but are in statistical categories such as employees lent from 

another company, workers holding a second job, and those working without a contract 

because they have not completed employment formalities.11

The larger urban category of manufacturing employment in urban units included 

29.8 million of the 38.0 million total for yearend 2002 urban manufacturing employment. 

(See table 1 and chart 1.) The other 8.2 million were in relatively small privately owned 

and privately operated enterprises (siying qiye) or were self-employed individual or 

family enterprises (geti jiuye) in urban manufacturing.12 China’s urban (chengzhen) 

manufacturing workforce in 2002 included 2.6 million workers in getihu (individual and 

household enterprises) and 5.6 million working in privately owned siying qiye. In the 

latter category, 0.8 million workers were categorized as “investors” in their own 

companies, and 4.8 million were called hired laborers or hired hands.13

5
On the basis of China’s urban manufacturing employment data (see table 1 and 

chart 1), 13 million urban manufacturing workers remain in public-sector (state-owned 

and urban collective-owned) work units. Thus, the private sector now employs 25 million 

of China’s reported 38 million urban manufacturing workers.14 Private-sector 

manufacturing workers are counted, and their numbers are reported, but otherwise, far 

less information is published about the private sector than the public sector. 

Because of the city bias of employment statistics in China, there are almost no 

further readily available details about the 45 million rural or 71 million TVE

manufacturing employees. This information gap is the biggest weakness of China’s 

statistics on manufacturing employment. (The report returns to the problematic 

classifications of urban and rural statistics in a later section.) 

Reported trends in manufacturing employment 

As shown in table 1, the officially reported number of employed manufacturing workers 

in China rose dramatically during the post-Mao economic reform period, from 53 million 

in 1978 to an all-time high of 98 million in 1995, declined sharply to 80 million in 2000, 

and then rose again to 83 million by yearend 2002. Rural manufacturing employment has 

risen with few setbacks throughout this 24-year period, peaking at a reported 45 million 

as of the end of 2002. The difference between China’s reported national and rural 

manufacturing employment should be urban manufacturing employment; but this number 

was not published for a number of years, and the column in table 1 is derived as a 

residual calculation. The figures so derived indicate that urban manufacturing 

employment in China rose from 36 million in 1978 to a high of 58 million in 1994-95 and 

then dropped to 38 million by yearend 2002. A figure of 38.018 million for urban 

manufacturing employment is directly reported in a published table.15 Therefore, the 

procedure used to derive urban manufacturing employment in table 1 appears to be 

defensible. Employment in urban manufacturing units reportedly dropped from 55 

million in 1994-95 to 30 million by yearend 2002, and total urban manufacturing staff 

and workers increased from 36 million in 1978 to 55 million in 1992-93, thereafter 

declining to 29 million by the end of 2002, on the basis of the reported statistics in table 

1. These employment trends based on the official data, however, are misleading. The next 

two sections discuss changes in definition and coverage that affect the available 

manufacturing employment statistics and the trends in manufacturing employment during 

1990-2002 after adjusting for the changes to the extent possible. 

Change in the definition of urban employed

What do the preceding numbers mean? In the first place, successive figures are 

sometimes not comparable due to changes in coverage or redefinition. In particular, the 

number for implied urban manufacturing employment dropped sharply, from 55.8 million 

at the end of 1997 to 43.9 million at yearend 1998, an apparent decline of 12 million in 1 

year. A similar drop is shown for manufacturing employment in urban units, from 51.3 

million at the end of 1997 to 38.3 million at the end of 1998, and thus down 13 million 

6
during 1998. Employment numbers for urban manufacturing staff and workers also 

declined, from 50.8 million to 37.7 million that year, a drop of 13 million as well. Figures 

for manufacturing staff and workers in state-owned units decreased by 11 million that 

year and went down by 5 million in urban collective-owned units, while increasing in by 

3 million in “other” ownership units. 

What happened to these manufacturing employment statistics during 1998? One 

reported change was that there was an important shift in the employment statistics 

coverage in urban areas. Starting in 1998, workers who had been laid off from active 

employment, but were still connected with their former employment unit, were no longer 

deemed employed and were thus excluded from the employment figures.16 Therefore, 

these laid-off (“off-post” or “not-on-post” in the English translation of China’s statistical 

yearbooks) urban manufacturing workers are not included in the 1998-2002 numbers for 

urban manufacturing employment, manufacturing employment in urban units, or urban 

on-post manufacturing staff and workers.17 By yearend 2002, the net result of the layoff 

and rehiring processes was that the number of laid-off urban manufacturing staff and 

workers totaled 9.13 million. 

Adjusted trends in manufacturing employment 

In order to gauge trends in manufacturing employment in China, the analyst must adjust 

for definitional changes and changes in coverage in the urban data. It is important to 

recognize that before, and even after, the definitional change in 1998, reported urban 

manufacturing employment figures for China included, and continue to include, millions 

of surplus workers.18 By the end of 2002, of those surplus manufacturing workers, 9.13 

million were in the laid-off category, but through 1997 they were still nominally 

employed in their manufacturing work units. 

One method for attempting to gauge true trends in manufacturing employment in 

China is to subtract the reported laid-off manufacturing workers from the pre-1998 total 

manufacturing employment figures (which still included laid-off employees), in order to 

get comparable figures for before 1998 and afterwards. There were reported to be 2 

million laid-off manufacturing employees still nominally connected to their work units in 

1995 and 3 million in 1996. Table 2 shows that, after adjustment of the 1995-96 totals for 

the reported definitional shift, there still was a steep drop in official total and official 

urban manufacturing employment between 1996 and 1998 that cannot be explained by 

the one definitional change that has been reported. This table would appear to indicate 

that on-post (not laid-off) manufacturing employment in China declined from 96 million 

in 1995, to 94 million in 1996, to 83 million in 1998, to 81 million in 1999. If on-post 

manufacturing employment were indeed dropping by 2 million manufacturing workers a 

year, then the total would have been 92 million in 1997, 90 million in 1998, and 88 

million in 1999. So the official figures for total manufacturing employment from 1997 to 

1998 had a loss of 7 million workers that is not accounted for by the one reported 

definitional change. 

There is no discontinuity between 1997 and 1998 in the official rural 

manufacturing data series. The definitional shifts appear to be only in urban data, and 

these shifts come entirely from changed coverage of urban manufacturing staff and 

7
workers. The category of on-post urban manufacturing staff and workers was dropping 

by about 21⁄2 million from 1995 to 1996 and again from 1998 to 1999. If we were to 

assume that the trend was continuous from 1995 to 1999, then we would see the 

following approximate numbers in the staff and worker category: 52.3 million in 1995, 

49.7 million in 1996, 47 million in 1997, 44.5 million in 1998, and 42 million in 1999. 

Instead, the reported 1998 figure was 37.7 million. Therefore, about 7 million workers 

were dropped from the category between 1997 and 1998, in addition to those workers 

dropped due to the known definitional shift from including laid-off workers in 

employment figures to excluding them. 

Now consider again the trends in China’s manufacturing employment based on 

official data, keeping in mind the unexplained loss of 7 million manufacturing workers 

from the numbers up through 1997 to the figures for 1998 and thereafter. In 1995, on the 

basis of official data, China had 96 million on-post manufacturing workers, and the 

numbers were dropping through 1997. The reported 1998 official national total was 83 

million. If the inexplicably missing 7 million are added back in, then perhaps the total 

was really 90 million, although that figure still signifies a significant drop in 

manufacturing employment from 1995 to 1998. By yearend 2000, the reported total was 

80.4 million (but the true number could have been more than 87 million if the missing 

workers were included). No matter how the official data are adjusted, China’s total 

manufacturing employment dropped by around 8.5 million or more from 1995 to 2000. 

The official total then rose by 2.6 million from yearend 2000 to 2002. So the net loss of 

manufacturing jobs in China during 1995-2002 was about 6 million. Nevertheless, it is 

important to note that the trend of declining manufacturing employment in China was 

apparently reversed after the year 2000. 

Below the national level, official figures for rural manufacturing employment rose 

until 1995-96 and stabilized from 1995 through 1999, thereafter rising every year since 

1999. Therefore, on the basis of the official series, all the declines in China’s 

manufacturing employment in the late 1990s happened in urban areas. Many who lost 

their jobs were laid off while still receiving basic living subsidies from their enterprises, 

and many others were subjected to mandatory early retirement. Some manufacturing 

workers in urban China have also become fully recognized as unemployed.19 Of the 

yearend-2002 registered unemployed urban workers who were previously employed 

(2.17 million), 41 percent had lost manufacturing jobs.20 This reduction in the workforce 

implies that 0.89 million former urban manufacturing workers were classified as 

unemployed as of the end of 2002. 

Apparently, then, manufacturing employment in China increased vigorously until 

1995, declined from that year to 2000, and has risen again since then, regardless of 

whether the reported data come from the Labor Ministry and the NBS or whether the data 

are adjusted for changes in coverage or definition. Urban state-owned and collectiveowned manufacturing enterprises have lost most of their employed workers since the 

early 1990s, as shown in table 1. Most of their former workers have been laid off, fired, 

subjected to early retirement, or retained by their enterprise after it was sold, was 

privatized, or became a joint Chinese-foreign company in the decade from 1992 to 2002. 

Meanwhile, rural manufacturing employment reportedly has continued to increase, and in 

urban areas, manufacturing employment in the category of other ownership units grew 

rapidly during that decade. This category includes manufacturing enterprises with joint 

8
(Chinese-foreign) ownership, shareholding stock ownership, limited-liability 

corporations, and foreign-owned enterprises.21 What these numbers appear to mean is the 

following: 

• China’s manufacturing is becoming less bloated with surplus workers over 

time; 

• The number of manufacturing workers (however defined or adjusted) in China 

has declined somewhat since 1995; 

• Urban State-owned and urban collective-owned enterprises have shown steep 

declines in numbers of manufacturing workers since the mid-1990s; 

• So-called rural manufacturing is still growing; and 

• Urban private-sector manufacturing employment is expanding. 

Research by Thomas Rawski helps us understand what is going on in some parts 

of China’s manufacturing sector. Rawski documented the decline in urban staff and 

worker manufacturing employment in China from 1993 to 2002. Utilizing detailed data 

from several engineering sectors producing widely used industrial components, he 

showed a 52-percent increase in labor productivity (value added per worker) in the short 

period from 1996 to 2000, while employment in these sectors dropped steeply by the year 

2000, to 63 percent of the 1996 numbers, and output was nearly stagnant. According to 

Rawski, “These data reveal industries in the throes of restructuring rather than dynamic 

growth.”22 China’s manufacturing sector is shedding surplus workers and becoming more 

productive and competitive. Meanwhile, Rawski pointed out, laid-off manufacturing 

workers in China and in developed countries such as the United States and Japan are 

experiencing similar dislocations in their personal and family lives. 

The U.S. Conference Board has emphasized that China is losing many more 

manufacturing jobs than the developed world (including the United States) is--and in 

many of the same industries in which the developed world has seen the greatest 

declines.23 Manufacturing industries in China with the greatest job losses during 1995-

2002 were textiles, steel processing, machinery, and nonmetal mineral products.24

China’s manufacturing job losses can be traced to the restructuring of extraordinarily 

inefficient state-owned and urban collective-owned factories and to rapidly advancing 

labor productivity.25

The next five sections of this study delve more deeply into some of the topics 

raised in the foregoing analysis. Enterprise employment data are contrasted with data 

from the 2000 population census, supporting the conclusion that the enterprise reports 

undercount millions of manufacturing workers. Then the problematic categories of urban 

and rural manufacturing workers are explored in more detail, leading to a statistical 

anomaly that goes further into the data on the TVE’s. Finally, key export regions are 

examined and migrant manufacturing workers are discussed, because many of China’s 

manufacturing workers have migrated into the export zones in search of jobs and there is 

some evidence that they are not well enumerated in China’s labor statistics. 

9
Data discrepancies

This section presents a comparison of manufacturing employment data from the 2000 

census of China with the annual enterprise data for the same year and attempts to explain 

the discrepancies between the two sources. The comparisons here show that the regular 

administrative reporting system misses many millions of workers, not only in the 

manufacturing sector, but also in many other sectors of the economy. In addition, a 

discussion of the census results highlights an apparent tendency on the part of rural 

households to report household workers as agricultural workers, even if they work in 

manufacturing part time or for part of the year. Therefore, although the census achieved 

more complete reporting than did the official annual compilations from enterprises, the 

census, too, appears to have undercounted manufacturing employment, especially outside 

the cities and towns. 

The 2000 census of China discovered more manufacturing workers than were 

reported from annual administrative data. Both the 1990 and 2000 censuses asked 

respondents information about the employment of all persons aged 15 years and older. In 

the 2000 census, the data were gathered in a long form filled out by about 10 percent of 

civilian households in every locality and chosen to be representative of the population as 

a whole. Figures cited in the rest of this report are extrapolated to the entire counted 

civilian population aged 15 years and older.26

Employment data from annual enterprise reporting and from China’s 2000 census 

do not agree with each other. For example, table 3 shows the estimated numbers of 

employees in each major sector of China’s economy at or near the end of the year 2000 

from the two major data sources. On November 1, 2000, the census recorded a total 

employed population of approximately 709.7 million workers. Two months later, 

administrative compilations of data from enterprises, economic units, and self-employed 

individuals recorded a total of 629.8 million workers, 80 million fewer than the census. 

(See table 3.) 

What are the sources of the discrepancies between these two sets of data? We can 

see from table 3 that the census recorded 123 million more workers in agriculture than 

did annual administrative data. One reason for this large difference is that the census 

asked about employment only in the last week of October 2000, the week just prior to the 

date the census was taken. The census surely detected individuals who work in 

agriculture during peak planting and harvest seasons, but not the rest of the time, and 

these workers were counted as employed in agriculture during the peak autumn harvest 

season. 

The way employment questions are asked in China’s censuses and the instructions 

for filling out the census forms apparently bias rural household respondents in favor of 

reporting all household members as agricultural workers, even if some adults in the 

family actually work in nonagricultural sectors of the economy most of the time.27

Therefore, the decennial censuses may overreport employment in agriculture and 

underreport actual employment in many industrial and service sectors of the economy. In 

particular, the censuses of 1990 and 2000 probably underreported the total number of 

manufacturing employees in China. 

10
In most other employment categories outside of agriculture, the census also 

estimated a larger employed population for the latter months of the year 2000 than did 

enterprise data compiled by the Labor Ministry and the NBS. This may mean that the 

census detected millions of workers that the administrative reporting system is regularly 

missing. (See table 3.) For example, in services, the annual reporting system seems to be 

leaving out millions of workers, perhaps because many service workers are in the 

informal economy. By contrast, the regular administrative reporting system recorded 

more workers than the census did in construction, in transport, in the small categories of 

geological prospecting and water conservancy, and in research and technical services. 

The annual system also reported 56 million people at yearend 2000 in the category of 

other unclassified workers, while the census was able to classify most workers into one of 

its standard employment categories. (See table 3.) Some of these “other” workers may in 

fact work in two parts of the economy, such as agriculture during peak seasons and 

manufacturing during another, or even the same, part of the year. 

The discrepancy between census and enterprise data on the number of 

manufacturing workers in China was not large in the year 2000, at least if census data are 

compared with the total employment figures by sector compiled by China’s Labor 

Ministry and the NBS and reported in table 3. The two data sets are as close together as 

they are because the census also likely undercounted rural manufacturing workers. (See 

later.) The census estimated 88.43 million persons employed in manufacturing during the 

last week of October 2000. On the basis of the national employment totals published by 

the NBS and the Labor Ministry, economic units reported that employment in 

manufacturing totaled 80.43 million at yearend 2000.28

What can account for this discrepancy of 8 million manufacturing workers 

between census data and the officially compiled enterprise data? First, the census counted 

each part-time worker as an employed worker. Anyone who worked more than 1 hour for 

pay in the week before the census was counted as one employed worker. Of 

manufacturing workers counted in the census, 3 percent worked fewer than 4 days in the 

previous week, and 97 percent worked full time or overtime. More specifically, 39 

percent of manufacturing employees worked for income 4 or 5 days in the previous week, 

and 58 percent worked 6 or 7 days during the 7 days before the census.29 It is possible 

that annually reported employment figures tend to neglect those who work less than full 

time. Therefore, part-time manufacturing workers might explain some of the discrepancy-

-no more than 2 to 3 million--between the census-based estimate of manufacturing 

workers in late 2000 and the official NBS-Labor Ministry compilation of yearend-2000 

enterprise data on manufacturing employees. 

Temporary workers in manufacturing who happened to be at work during the last 

week of October 2000 would have, or at least should have, been reported by the census as 

employed in manufacturing. Annual enterprise data also capture some temporary 

workers. For example, it was reported that, within the category of on-post urban 

manufacturing staff and workers in state-owned enterprises in 2002, 9.31 million (95 

percent) of 9.79 million were in long-term manufacturing employment, while 0.47 

million (5 percent) were in temporary manufacturing employment.30 However, long-term 

or temporary status is reported only for this 10 million of China’s reported total of 83 

million on-post manufacturing workers in 2002. The annual enterprise reporting system 

classifies all urban on-post employees as either “long-term,” defined as having been 

11
working for 1 or more years, or “temporary, provisional,” defined as having worked for 

less than 1 year.31 Many of the latter employees may simply be workers who have not yet 

been on the job long enough to qualify as long-term workers, even though that is the 

intent of both employer and employee. It is possible that the census included more of 

China’s actual temporary manufacturing workers than are included in the annual 

enterprise reports, although there does not appear to be any proof that such a bias or 

shortfall exists in enterprise data. 

A minor cause of differences in manufacturing employment between census data 

and annual data is that the censuses of 1990 and 2000 recorded employment of the 

population aged 15 years and older, whereas compiled annual data are supposed to refer 

to the population aged 16 years and older.32 According to 2000 census data, China had a 

total of 334,000 manufacturing workers who were exactly age 15 in the last week of 

October 2000.33 Therefore, 0.33 million of the 8.00 million differential between census 

and annual enterprise numbers of manufacturing workers in China in 2000 could have 

been caused by the inclusion of workers aged 15 years in census data and their apparent 

exclusion from annual employment data. 

At the older end of the working ages, the census was supposed to include as 

employed everyone aged 15 years and older in the long-form sample population who had 

worked for income either part time or full time in the week before the census, no matter 

what their age. China’s regular employment statistics define working ages as 16-59 years 

for men, 16-54 years for women working in white-collar jobs, and 16-49 years for 

women in blue-collar jobs. In theory, with regard to urban workers, only those in these 

age groups are included in the category of staff and workers. Employed people who are 

still working beyond the statutory working ages or who have been rehired after retiring 

from a job are supposed to be included in the category of “other” urban employment, in a 

subcategory of retirement-age workers who have been rehired or who have continued 

working. The aforementioned working ages do not apply to agricultural employment, and 

it is not clear whether they have any relevance to rural or town manufacturing 

employment. In theory, annual employment statistics, as well as census employment 

statistics, should include all those people in their fifties, sixties, and older who are 

working to earn income. Therefore, at the older working ages, there should be no age 

cutoff in employment statistics and no definitional difference between census figures and 

annual enterprise data on manufacturing or other employment. 

Urban and rural manufacturing workers 

In China’s annual statistics on employment in manufacturing, the categories “rural” 

(xiangcun) and “urban” (chengzhen) are profoundly problematic.34 If these employment 

statistics followed China’s official statistical definition of urban and rural places and 

populations, then urban would include manufacturing employment in cities (chengshi or 

cheng) and in towns incorporated as urban places (zhen). The urban manufacturing 

figures should include actual workers in manufacturing in cities and towns, regardless of 

whether the workers have or do not have their permanent residence or registration there. 

If rural villagers are employed full-time in manufacturing in an urban town (zhen) or in a 

12
city, then, on the basis of the NBS statistical definition of urban, these manufacturing 

employees should be classified in the data as urban manufacturing workers. 

Indeed, China’s census of November 1, 2000, reported that the nation had 41.96 

million manufacturing workers in cities and 18.41 million in urban towns (zhen), for a 

total of 60.36 million urban manufacturing workers, constituting 68 percent of all the 

manufacturing workers in China. The census also counted 28.07 million rural (xiangcun) 

manufacturing workers, 32 percent of the enumerated manufacturing workers.35 As it is, 

the 2000 census may have underestimated the urban proportion of manufacturing 

employment because rural workers who had moved to towns or cities within the previous 

6 months and who were working in manufacturing there would be counted for the census 

back in their villages and therefore might be called rural manufacturing workers or even 

rural agricultural workers. 

Table 1 shows, however, that the annual statistics for yearend 2000 recorded 

urban manufacturing employment at only 39 million (fewer than the 2000 census counted 

in the cities alone), just 49 percent of the reported national total, while rural 

manufacturing employment, at 41 million, constituted more than half of China’s 

manufacturing employment. The category of manufacturing employment in urban units 

was reported at only 33 million that year and that of urban manufacturing staff and 

workers were reported at 32 million. China’s 2000 census used a comparatively careful 

definition of urban population and employment that has been refined by the NBS during 

the last two decades. The NBS official statistical definition of urban and rural populations 

and employment is arguably the best standard for other Chinese statistics. Interestingly, 

the breakdown of China’s annual manufacturing employment statistics into the rural 

classification and the various urban categories is inconsistent with China’s own statistical 

definitions of urban and rural. 

The inconsistencies between census data and annually reported data on urban and 

rural manufacturing employment arise in part because annual data are “administrative.” 

The regular statistics are based on administrative geographical boundaries, rather than on 

statistical distinctions between rural and urban employment. In the administrative data, 

urban encompasses only cities and perhaps also the political county seat (called the 

“county town”) of each county in China, while rural denotes everywhere else, including 

all other towns that are officially established as urban.36 In the annual manufacturing 

employment statistics, however, the word urban appears to be a misnomer. The data 

appear to refer to manufacturing employment only in China’s cities and perhaps some of 

their immediate suburbs and the county towns. Apparently, almost all of China’s 

manufacturing employment in urban towns (zhen) and rural areas is lumped together as 

rural manufacturing employment. 

In truth, the discrepancy between the annual administrative data and the census 

data is even greater than the preceding paragraph asserts. According to the NBS, some 

“urban” data on manufacturing employment include data from units that are not in fact 

located in any urban area.37 Specifically, if a state-owned factory is located in a remote 

rural area, its data might still be included in urban data on employment and wages in 

manufacturing. This categorization is a legacy of the planned-economy practice of 

reporting data by administrative subordination rather than geographic locality. In 

addition, according to the NBS, there is at least one case of a rural county in Guangdong 

province that was reclassified and established as a city, after which all the factories in the 

13
new “city” continued to be classified and reported as TVE’s; indeed, it may still be that no 

manufacturing employment or wage data from this new “city” are reported as urban. 

Fortunately, of late China has been making a gradual transition to compiling 

statistical data on the basis of geographic locality rather than administrative 

subordination.38 Still, there appears to be no concrete information that can help quantify 

what proportion of the reported data on “urban” manufacturing employment and wages is 

actually from rural locations or what proportion of “rural” or “TVE” manufacturing 

employment or wages actually refers to manufacturing units located in cities. 

A major statistical anomaly 

China’s statistics on manufacturing employment suffer from an important inconsistency. 

The Labor Ministry concerns itself primarily with city employment, while the Ministry of 

Agriculture is responsible for data on rural and town (zhen) employment. This division of 

responsibility is a legacy of the Maoist command-economy era, and it has not yet been 

corrected. Therefore, the Labor Ministry publication China Labor Statistical Yearbook 

concerns itself almost entirely with city employment and wage statistics; even within 

cities, the Labor Ministry focuses its data collection and reporting on the rapidly 

declining urban state-owned and collective enterprises. The Labor Ministry calls these 

data “urban” statistics. Meanwhile, the Agriculture Ministry collects employment and 

wage data from the TVE’s, including those engaged in manufacturing, and publishes the 

data in its own publications. It appears that there is no coordination between the two 

ministries. For example, in calculating total manufacturing employment in China, NBS

and the Labor Ministry seem to ignore the Agriculture Ministry data from the TVE’s. 

This problem is illustrated in table 1 and chart 1. The rightmost two columns of 

the table report Ministry of Agriculture data on employment in industry (gongye) TVE’s 

since 1978. This category is almost all employment in manufacturing. (The rest of 

“industry” employment comprises the two relatively small categories of mining and the 

production and supply of electricity, gas, and water.) In 2003, a Ministry of Agriculture 

publication reported for the first time the number of TVE manufacturing employees (for 

yearend 2002), and that number constituted 92.4 percent of TVE industry employment. 

Arbitrarily using that same percentage for the years starting in 1990, the far right column 

of the table presents estimated TVE manufacturing employment during 1990-2001. 

It is important to note that TVE industry employment data had an abrupt 

definitional shift in 1997 in which the total reported dropped sharply, only to rise again 

the following year. Part of the jump in the number of TVE manufacturing employees in 

1998 may be associated with the unexplained statistical loss of 7 million urban 

manufacturing staff and workers in 1998 as discussed earlier. In 1998, the NBS

reclassified the group of directly reporting enterprises to those with annual sales revenue 

above a certain amount and exempted smaller enterprises.39 As reporting requirements 

were reduced for small and medium-sized enterprises in urban areas, 7 million 

manufacturing workers inexplicably dropped out of the urban numbers entirely and were 

not picked up anywhere in the official rural or in the official total manufacturing 

employment series. However, they may have been added to the TVE employment 

category, boosting its manufacturing employment numbers in 1998. 

14
It is unclear just what the TVE industry employment numbers actually mean and 

do not mean or how part-time or part-year employees are treated in the data. Therefore, it 

is unclear whether TVE industry employee numbers are overstated, understated, or about 

right. Nevertheless, the TVE data must be considered in evaluating China’s manufacturing 

employment levels and trends, and evidence discussed in the remainder of this article 

argues for using those data, rather than the official series on rural manufacturing 

employment, to estimate noncity manufacturing employment in China. In addition, the 

TVE data provide the only figures on rural wages, and those wages must be used in 

constructing wage and compensation estimates for all of China. 

The column giving data on total manufacturing employment in table 1 does not 

include all the reported TVE manufacturing employees. How do we know this? The 

reason is that all or almost all of the reported “urban” manufacturing employees in China 

are not in TVE’s. The category of urban “staff and workers” explicitly excludes all TVE

employees.40 The rules about how to report the “other” urban enterprise employees that, 

together with staff and workers, constitute “employment in urban units” do not say 

anything explicit about TVE’s.41

It may be that some of the residual 8.21 million “urban” manufacturing 

employees who were self-employed or who worked in private enterprises in 2002 also 

were called TVE employees, but this overlapping of categories appears unlikely, given the 

way urban and rural employment data for China are reported.42 These workers are in 

cities, whereas TVE manufacturing employees generally work outside the cities, in rural 

areas and in towns. In fact, instructions for filling out China’s labor force survey 

specifically state, “TVE employees are only those who work in enterprises located in rural 

townships and villages.”43 Among manufacturing workers in 2002, there were 21.35 

million employees in private enterprises (siying qiye) or in individual or family 

enterprises (geti duzi qiye). Of these, 8.21 million were in the cities, while 13.14 million 

were classified as “rural,” meaning noncity; it is likely that the latter group was included 

in 2002 TVE manufacturing employment and wage statistics.44

If the 29.81 million manufacturing employees working in urban units at yearend 

2002 are subtracted from the total manufacturing employment figure for the same year 

(table 1), the result is 53 million manufacturing employees who could be working in 

TVE’s. Yet the Agriculture Ministry reported 70.87 million TVE employees in 

manufacturing that year. (See table 1.) 

Chart 2 graphs two different estimates of total manufacturing employment in 

China. The “reported” series is that constructed by the NBS and the Labor Ministry and 

titled “Total manufacturing employment” in table 1. The series titled “Urban and TVE” in 

the chart assumes that the columns for derived urban manufacturing employment 

(referring to cities) and TVE manufacturing employment (referring primarily to towns and 

villages--the rightmost column in the table) are mutually exclusive and do not overlap; 

the chart series is the sum of those two sets of data. (Data from the two series in Chart 2 

are given in table 4.) Both series indicate that (1) total manufacturing employment in 

China peaked in the mid-1990s; (2) there was a slow decline in Chinese manufacturing 

employment in the late 1990s; and (3) beginning in 2001 or 2002, there was a slight 

increase in national manufacturing employment. (Note that there were definitional shifts 

in TVE industry employment data, and then in urban manufacturing employment data, 

from 1996 to 1998.) 

15
The “urban-and-TVE” series in chart 2 and table 4 suggests that China had 109 

million manufacturing employees by yearend 2002, whereas the officially compiled 

series reported 83 million, a difference of 26 million. Which series is correct or, at least, 

more nearly correct? 

On the one hand, if the yearend-2000 totals from the two series in the chart and 

the table are compared with 2000 census-based estimates of manufacturing employment, 

it becomes evident that the census found about 8 million more manufacturing workers in 

China than the NBS-Labor Ministry compilation that year (see table 3), but 20 million 

fewer than the TVE and urban manufacturing employment total for that date. The census 

number is closer to the official series, which would argue in favor of that series. 

On the other hand, the urban-and-TVE series agrees with the results of the 1995 

industrial census, which counted 147 million workers in industry (gongye) nationwide. 

China’s official administrative data series for the whole country (not only for TVE’s) 

reported that, in 1995, 89 percent of all of China’s “industry” employees were in 

manufacturing. Applying this percentage to the industry employment data from the 1995 

industrial census would translate into 131 million manufacturing workers nationwide that 

year.45 The total of urban and TVE manufacturing employment for yearend 1995 was 128 

million. Therefore, evidence from the 1995 industrial census of China argues for using 

the urban and TVE series to estimate total manufacturing employment in China.46 

More information is needed to determine which series is more nearly correct for 

total manufacturing employment in China during 1990-2002. Tentatively, it would appear 

that the urban and TVE series on manufacturing employment would be more useful than 

the official series. One reason is that the NBS and the Labor Ministry have little usable 

information associated with their figure of 45 million “rural” manufacturing workers. 

Nothing is published except that one number, and no information is available on how this 

number was derived or estimated. By contrast, a branch of the Agriculture Ministry has 

gathered and published some information on the TVE manufacturing employees and on 

the earnings paid to them. The only regular reporting system that collects detailed data 

for rural enterprises, including manufacturing enterprises, is the data collection system 

run by the Township Enterprise Bureau of the Ministry of Agriculture: 

The Township Enterprise Bureau of the Agriculture Ministry collects detailed 

data on township-run and village-run collective enterprises, and basic statistics on 

co-operative enterprises, private enterprises and individual-owned enterprises. 

The NBS assists the Township Enterprise Bureau in the design of the statistical 

reporting forms. The Township Enterprise Bureau collects the data and makes 

some of them regularly available to the NBS. The NBS relies on the Township 

Enterprise Bureau’s data and has no independent regular reporting system for 

rural enterprises.47

If the urban and TVE series is the more nearly correct one, then the 2000 census 

long form may have underestimated the true number of manufacturing workers in China 

on November 1, 2000, by about 20 million (108,000,000 – 88,000,000). (See tables 3 and 

4.) One study has pointed out that the census questionnaire and the instructions for 

enumerators may tend to bias the responses of rural households in favor of reporting all 

members as engaged in agricultural employment, even if a family member is working in 

16
manufacturing.48 Another problem is that when the 2000 census enumerators located 

migrants, they probably handed them a short census form to fill out, whereas households 

were sampled to decide which would receive the long form. The result of these 

procedures might be that employment in industry or service sectors favored by migrants 

is underestimated by the census long form.49 Also, in some parts of China, the last week 

of October is still a heavy harvest season, and the census might have counted as 

agricultural workers millions of manufacturing employees who were only temporarily 

diverted into agriculture. 

If the urban and TVE manufacturing series is the preferred one, then China 

reported about 105 million manufacturing employees at yearend 1990, a figure that rose 

to 128 million at yearend 1995 and 130 million at yearend 1996. (See table 4.) In 1997 

and 1998, statistical changes and corrections, as well as redefinitions, in both TVE data 

and urban employment data resulted in a drop in China’s total manufacturing (urban and 

TVE) employment figure, to approximately 112 million by yearend 1998, of which 44 

million were called “urban” and about 68 million “TVE.” (See table 1.) Since then, TVE

manufacturing employment apparently rose slowly each year, to 71 million at yearend 

2002, while on-post (not laid-off) urban manufacturing employment dropped from 44 

million to 38 million. Total urban-and-TVE manufacturing employment in China declined 

by 4 million, from 112 million in 1998 to 108 million in 2000-01, and then rose slightly 

to 109 million by yearend 2002, as shown in table 4 and chart 2. 

Occupational categories of China’s manufacturing workers 

 The most recent available data on the occupations of manufacturing employees in 

China comes from the 2000 population census, which gives the broad occupational 

breakdown of those who were working in manufacturing enterprises in the last week of 

October 2000, based on a 10 percent sample of households in every PRC locality in the 

2000 census.50 (This author has not been able to locate a similar breakdown reported for 

the annual data on manufacturing workers.) According to the 2000 census, the 

manufacturing sector included 67 million production, transport, equipment, and related 

workers; such line workers constituted 76 percent of the 88 million manufacturing 

employees estimated by the census. The second largest group in manufacturing was 8 

million sales and service workers, who made up 9 percent of the total. There were 5 

million professional and technical workers, making up 6 percent of manufacturing 

employees. Clerical workers numbered 4 million, constituting 5 percent of the total. 

There were 3 million administrators and managers, 3 percent of manufacturing 

employment. 

 Census data showed that there was a surprising degree of balance in the total 

numbers of men and women working in China’s manufacturing. Of recorded 

manufacturing workers in the 2000 census, 54 percent were men and 46 percent women. 

There were only 3 million more male than female production workers, a total of 35 

million men and 32 million women. Men strongly dominated management, as well as 

sales and service and clerical staff. There were more women than men in the 

professional/technical category. Within the manufacturing sector, however, factory 

observations suggest that women do most of the low-paid meticulous hand-assembly of 

17
light industrial products, while men dominate the better-paying jobs as machinists and 

equipment operators. 

Manufacturing in key export regions 

Many establishments in China engage in manufacturing that is part of global trade. These 

manufacturing enterprises import large quantities of components, inputs, raw materials, 

and machinery, primarily from other Asian countries, and they employ large numbers of 

nonnative managers and professionals. They export some of their final product to the 

global market, chiefly the United States, Europe, and developed countries in Asia.51 The 

two leading manufacturing regions producing for the global market today are the Pearl 

River (Zhujiang) Delta (near Hong Kong and Macao) of Guangdong Province, which 

includes 9 cities, and the Yangtze River (Changjiang) Delta, which includes 15 cities in 

Shanghai Municipality, Zhejiang Province, and the southern half of Jiangsu Province.52

Both areas include many noncity manufacturing centers. 

At yearend 2002, on the basis of the NBS and Labor Ministry compilation, these 

four provinces reported a total manufacturing employment of 2.69 million in Shanghai 

Municipality, 7.81 million in Zhejiang Province, 7.45 million in Jiangsu Province, and 

7.81 million in Guangdong Province.53 Except in Shanghai Municipality, the majority of 

the manufacturing employees were classified as rural in these export-oriented provinces. 

Rural manufacturing employees totaled 1.09 million in Shanghai Municipality, 5.82 

million in Zhejiang Province, 4.61 million in Jiangsu Province, and 4.25 million in 

Guangdong Province.54 If the Agriculture Ministry were to report the numbers of TVE

manufacturing workers by province, the numbers for those four provinces would 

undoubtedly be much higher than the reported numbers of rural manufacturing 

employees there. If their TVE manufacturing workers constitute about 92.4 percent of 

their TVE industry workers, then the four provinces have approximately the following 

numbers of manufacturing workers outside their cities: Shanghai, 1.50 million; Zhejiang, 

8.00 million; Jiangsu, 6.96 million; and Guangdong, 7.61 million, for a total of about 24 

million.55 These numbers are far greater than the numbers of rural manufacturing workers 

reported by the NBS and the Labor Ministry for those provinces. 

Of China’s reported 70.9 million TVE manufacturing employees in 2002, only 

13.4 million were reported to be producing for export, while 57.5 million were apparently 

producing only for the domestic market. Most of the TVE employees producing for the 

export market probably were located in the Pearl River and Yangtze River Deltas. 

Migrant manufacturing workers 

Where are the migrant manufacturing workers in China’s statistics? Most published data 

on manufacturing employment do not single out migrants. Therefore, it is difficult to 

discover how many migrant manufacturing workers there are and where they are. 

Many of China’s urban manufacturing workers, especially in the exportmanufacturing zones, have migrated into cities and their suburbs from rural areas. These 

rural-to-urban in-migrants are supposed to be included in 2000 census figures on urban 

18
manufacturing employees if they have been in the city for 6 months or longer. Also, 

annual enterprise data for urban manufacturing units are, in theory, required to include 

workers from rural areas in the category of urban manufacturing “staff and workers.” 

Specifically, the urban employment classification “on-post staff and workers” includes 

the category “workers whose population registration is in rural areas”; all these figures 

are to be reported monthly, quarterly, and annually.56 According to the NBS, the official 

series on manufacturing employment in urban units (see table 1) included a total of 4.59 

million migrant manufacturing workers (whose household registration was still in rural 

areas) at yearend 2002. The 4.59 million figure constituted 15 percent of the 29.81 

million manufacturing employment in urban units; the number of in-migrant 

manufacturing workers with rural population registration increased to 5.46 million at 

yearend 2003, or 18 percent of manufacturing employment in urban units at the end of 

that year.57

Many millions of young rural workers have migrated to China’s exportmanufacturing zones in the most recent decade and a half to work in factories. Sometimes 

these factories are within city administrative boundaries, but often they are located in 

industrial parks, suburban areas, built-up periurban industrial zones, towns, or rural 

regions where agricultural land is being taken over for manufacturing zones. Both foreign 

and domestic employers who are eager to keep down their labor costs and statistical 

reporting requirements may prefer that their export-processing factories be classified as 

rural or TVE.

58 Under such a classification, they need meet few, if any, requirements to 

pay social insurance and other welfare obligations for their hundreds or thousands of 

production and hand-assembly workers, and, at the same time, data-reporting 

requirements for their enterprises are minimal. Many of the migrant manufacturing 

workers in these factories may be counted in China “rural” manufacturing employment 

figures or in the TVE manufacturing industry employment numbers. (See table 1.) 

There is, however circumstantial evidence that not all migrant workers are 

included in China’s official annual employment data. China’s November 1, 2000, census 

estimated that there were already 14.60 million migrant rural-to-urban manufacturing 

workers, constituting 25 percent of all manufacturing workers in cities and urban 

towns.59 Worker migration has been increasing since then, especially for manufacturing, 

so the number likely was larger by the end of 2002. 

Other indirect evidence from one province points to the same conclusion. 

Shanghai Municipality carried out a detailed survey of its “floating population” (liudong 

renkou) as of August 1, 2003.60 The survey estimated that in-migrants from other 

provinces who had been in Shanghai Municipality for a day or more totaled 4.99 million. 

Of these individuals, 3.75 million were employed, yet the Shanghai Statistical Yearbooks

exclude even long-term in-migrants from their figures on the total population of the 

municipality and, therefore, probably from the total employment figures (7.43 million at 

yearend 2002; 8.13 million at yearend 2003) and the manufacturing employment figures 

as well.61 Data on manufacturing employment in Shanghai Municipality in the China 

Labor Statistics Yearbooks are based on the data in the Shanghai Statistical Yearbooks.

Shanghai Municipality reportedly had 2.69 million manufacturing workers at yearend 

2002 and about 2.61 million at yearend 2003.62 As of August 1, 2003, there were 1.27 

million floating in-migrant manufacturing workers in Shanghai Municipality. It appears 

that these migrant manufacturing workers were largely excluded from the official data 

19
series on Shanghai. Unless they were counted in China’s official data series as 

manufacturing workers back in their home provinces, they also were missing from the 

official national manufacturing employment series that is compiled from provincial data. 

Is China’s labor supply “inexhaustible”? 

China is widely perceived to have an unending supply of poor laborers willing to work 

for low wages: 

Right now China is, in many ways, the centripetal force of globalization—

attracting capital and companies at an increasing rate; in the process, given its 

inexhaustible supply of cheap labor and surprisingly swift ascent up the 

technological food chain, it is rewriting the economics of scores of industries.63 

Rawski, for example, refers to “China’s growing problems of unemployment and excess 

labour supply.”64 How big is China’s surplus labor force and what are the characteristics 

of these adults? Are they suitable and readily available to work in China’s manufacturing 

industries, or not? 

China has sustained massive layoffs in its urban state-owned and collective 

manufacturing industries, as indicated by the sharp declines in their employment numbers 

in Table 1. “The shutdown of inefficient state-owned plants has cost China tens of 

millions of jobs, with more to go.”65 In addition, government employment has been 

steeply cut in recent years. The outcome is that in China’s urban areas, the unemployed 

and laid-off workers may be about 6-13 percent of the economically active population,66

and even higher in some important industrial cities,67 with some estimates of the true 

unemployment rate rising to 25 percent as some scholars attempt to include disguised 

unemployment.68 In China’s rust belt in the northeast, some cities are estimated to have 

actual unemployment rates approaching 40 percent of the labor force. China’s urban 

surplus workers include millions of middle-aged and older formerly employed workers 

who may or may not be suitable for the required work in manufacturing. Many have been 

forced to retire early, have left the labor force, and have lost heart, so they cease looking 

for work.69 Some never even tried to look for work because they feel that whatever might 

be available is beneath them. But there are also millions of young adults with a senior 

high school or equivalent level of education who are looking for their first or second job. 

This is a large pool of potential employees who are already in the cities. 

The surplus labor force in China’s countryside is variously estimated in a huge 

range of 100-200 million.70 For example, “The unemployment rate in urban areas is 

estimated at more than 8 percent; there may be an additional 200 million jobless workers 

in the countryside.”71 According to some surveys, nearly a third of today’s rural labor 

force is surplus agricultural workers.72 As agriculture modernizes in China during the 

coming decades, hundreds of millions of agricultural workers will need other kinds of 

employment.73 

Chinese manufacturers have access to an almost unlimited supply of cheap labour. 

By some estimates, there are almost 200m underemployed workers in rural areas 

20
that could move into industry. This surplus labour may take at least two decades 

to absorb.74 

Are China’s potential manufacturing employees willing to move from the village, town, 

or city where they are to wherever there are jobs? In general, the answer appears to be 

yes: 

Now [in China] people are concerned with...can I find a higher paying job, can I 

move to a different place to get better opportunities? Seven years ago, people 

were concerned about getting opportunities from where they were. Now they are 

increasingly asking ‘Can I move somewhere else, from the countryside to the city 

or from this province to another province? And if I am trained properly, can I 

compete for better jobs and how do I compete?’ [Interview with World Bank 

China Program Director Yukon Huang.]75 

There are increasing numbers of reports that manufacturing and other industries in the 

Pearl River Delta (PRD) or other parts of Guangdong Province are experiencing labor 

shortages in the most recent several years. Fujian and Zhejiang provinces have also been 

affected. The main reasons for these shortages of manufacturing workers in the booming 

coastal provinces are: 

--Many city governments continue trying to protect urban-born workers from 

competition for jobs by restricting migration from rural areas. Cities still have 

labyrinthine and costly systems in place to control and minimize in-migration, 

including quotas for the number of migrants enterprises can employ, fees that 

firms have to pay in order to employ a migrant, expensive required migrant 

identity cards and migrant employment cards and temporary resident cards, and 

restrictions on giving formal sector jobs to those without local permanent 

residence registration. Migrants from rural areas are barred from more desirable 

jobs and subjected to significant wage discrimination in urban areas.76 

--Continuing hidden barriers to migration, including lack of social security and 

health care for migrants and inability to get urban residence registration.77

Policies that continue to dampen labor mobility are keeping China’s labor markets 

segmented.78 

--In 2004, rural incomes appear to be rising in some areas that normally supply 

low-paid manufacturing labor to PRD factories, inducing some potential migrants 

to decide they are better off staying in the countryside nearer their homes.79 Grain 

prices and agricultural subsidies have increased, making agricultural work more 

attractive than before.80 

--Flat and extremely low pay rates and poor working conditions in PRD factories, 

which make them less attractive to migrants than east coast factories that pay 

more and have begun to improve benefits.81 

21
--Objectionable practices, such as routine withholding of months of wages by 

manufacturing employers in order to prevent workers from leaving the factories, 

are becoming widely known among former, current, and potential migrant 

laborers, who are realizing that they will not be paid what they are promised. 

Therefore, fewer workers are willing to migrate, especially to the PRD. The PRC 

government has passed a new law effective December 1, 2004, to force employers 

to pay all wages owed and pay on time.82 

These labor shortages will presumably be solved by policy changes to make migration 

more desirable and feasible for rural workers, as well as by rising wages and improved 

working conditions in China’s manufacturing enterprises. Trade and non-trade barriers 

between China’s provinces need to be eliminated in order to free up the movement of 

labor: “While Guangdong’s factories are thought to be as much as 2 million workers 

short, the inland provinces have cheap labour in abundance.”83 

What about the coming decade or two? Will China run out of people willing to 

work in manufacturing for a low wage by international standards? It is true that the PRC 

had a steep fall in fertility during the 1970s, when China implemented its forceful family 

planning program in rural areas and then its one-child policy. Since then during most 

years, fertility in China has been extraordinarily low by developing country standards. 

Cohorts of children born from the late 1970s to the late 1980s have already entered labor 

force ages. China’s cities in particular have comparatively small cohorts of young adults 

because of the success of the one-child policy in cities. So analysts might speculate that 

China will soon experience shortages of young adult workers, especially in urban areas 

but nationally as well. 

Countering this demographic trend, however, is the massive legacy of surplus 

labor in China’s rural and urban economies that will continue to be felt for some time: 

“...a sizable surplus of labor still exists in the rural sector (about 150 million) and stateowned enterprises (about 10-11 million).”84 If there are shortages of city-born young 

adult workers in some economically booming cities, employers can find eager workers 

from the vast countryside who can be trained to do most of the jobs, even if their 

education had stopped after junior middle school. Now and in the coming decades, urban 

China can draw on rural-to-urban migrants to fill gaps between urban demand for labor 

and urban-born supply of labor.85 “Up to 500 million peasants are expected to migrate to 

cities in search of factory work over the next two decades.”86 Not only that, but 

productivity in China’s manufacturing industries will continue to rise, which will require 

fewer employees for the same output. China’s massive pool of rural labor needing 

modern jobs is expected to continue to depress manufacturing wages in the PRC: 

The United Nations estimates that some 200 million people will move from 

China’s rural areas to cities between 2000 and 2010. Even assuming labor 

demand from China’s factories keeps growing rapidly, there is an almost infinite 

supply of workers to fill it. That means wages will likely remain low, and 

employers will have little incentive to listen to complaints about working 

conditions.87 

22
Therefore, for the first decades of the 21st century, the PRC has for all practical purposes 

an unlimited supply of labor, at least of the unskilled and minimally educated variety, and 

perhaps also of basically literate and numerate hard-working laborers who were born in 

the countryside. 

A global perspective

Table 5 gives BLS compilations of levels and trends of manufacturing employment in the 

Group of Seven (G7) developed countries; in 2002, these countries had a total of 53 

million manufacturing workers. China’s official data showed 83 million manufacturing 

employees that year, but, as mentioned earlier, that figure was likely an understatement, 

and the true number was probably closer to 109 million. (See table 4.) Most of the 

countries listed in table 5 have had declining numbers of manufacturing workers, as did 

China in the late 1990s, because of both rising productivity and increasing global 

competition in manufacturing.88

In addition, the share of manufacturing in total employment has been declining in 

most of the G7 countries.89 In 1990, manufacturing employment ranged from 15 percent 

to 32 percent of total employment in these developed countries, but by 2002, the share 

was down to 12 percent to 24 percent of total employment. In China, meanwhile, official 

data showed that manufacturing constituted only 14 percent of total employment in 1990, 

after which it declined to 12 percent in 2002. The difference between China and the 

developed countries, of course, is that agriculture still employs a large proportion of the 

working population in China. Chart 3 shows that, even though manufacturing employs a 

similar proportion of workers in the United States and China, most other workers in the 

United States are in services, whereas in China the service sector is comparatively 

underdeveloped and agriculture continues to employ more workers than services. 

Why does China have so many more manufacturing workers than other countries? 

First, much of China’s manufacturing production is still labor intensive rather than capital 

intensive, so more workers are required in China to produce the same output. Second, 

China is extremely competitive in the global market for manufactured products and is 

able to sell its manufactures around the world, not only because it pays low wages, but 

for many other good reasons as well. Third, the manufacturing sector in China serves the 

country’s own huge domestic market as well as the international market. 

Summary and conclusions 

This report has collected and assessed the available statistics on manufacturing 

employment in China. Official data from the China National Bureau of Statistics and the 

Labor Ministry show a steep drop in urban manufacturing employment in China from 

1995 to 2001 and in total manufacturing employment from 1995 to 2000, after which the 

numbers stabilized or began to rise. The declines in Chinese manufacturing employment 

in the late 1990s were caused by (1) massive layoffs and early retirements of redundant 

workers in China’s urban state-owned and urban collective-owned manufacturing 

enterprises, (2) a change in coverage starting in 1998 that has included only on-post (not 

laid-off) manufacturing workers in the urban employment numbers from 1998 to the 

23
present, and (3) another definitional shift from 1997 to 1998 that has not been explained. 

The analysis presented here has shown that, even after adjustment for the definitional 

shifts, China has lost millions of manufacturing workers since the mid-1990s. 

Published labor statistics for China continue to emphasize data for the declining 

urban state-owned and collective-owned enterprises, while neglecting the healthiest and 

most dynamic parts of the economy. This approach means that the employment numbers 

put out by the Labor Ministry and by the National Bureau of Statistics are becoming ever 

more irrelevant. In manufacturing, the action has moved to the private sector. In urban 

statistics, the booming private domestic, foreign-owned, and multinational manufacturing 

enterprises and corporations are lumped under the umbrella term “other ownership units.” 

Privately owned and family-owned urban siying qiye manufacturing businesses are 

ignored in the employment data from the Labor Ministry and the NBS, and the same is 

true of self-employed manufacturing workers in the cities. Yet it is the urban private 

sector that has seen ever-increasing manufacturing employment. “Other” urban 

manufacturing ownership units had only 1.35 million employees in 1990, but the number 

has grown every year since then and reached 15.82 million by yearend 2002. Meanwhile, 

the residual category of urban manufacturing workers employed in the privately owned 

siying qiye and getihu rose from less than 1 million in 1990 to 8.21 million by yearend 

2002. It appears that Government statistical and labor agencies do not pay adequate 

attention to the private-sector manufacturing corporations and the small manufacturing 

businesses in China’s cities. 

China’s employment statistics focus on the cities, while the expanding “rural,” 

town, suburban, and industrial park manufacturing enterprises all over the country are 

almost entirely left out of the statistics. Apparently, virtually all of China’s manufacturing 

enterprises and factories located outside strict city limits are lumped together under the 

category “town and village enterprises” (TVE’s). This term is a misnomer for all the 

employers, both private and collective, both domestic and foreign, of the 71 million 

noncity manufacturing employees in China who are referred to as TVE manufacturing 

employees. Most TVE’s were privatized by the late 1990s; therefore, the private sector has 

become important in employing TVE workers as well as urban workers.90

In a holdover from the Maoist decades, the Ministry of Agriculture is responsible 

for supervising and collecting statistics on all the industrial enterprises located outside 

city limits in China. In 2003, for the first time, one of the agency’s publications, the 

China Village and Town Enterprise Yearbook, published the number of TVE

manufacturing employees in China.91

Adding together official manufacturing employment numbers for the cities and 

estimates for the TVE’s suggests that China had about 105 million manufacturing 

employees in 1990, and the total increased in the early 1990s to a peak of 130 million in 

1996. This large number may have included some overreporting of TVE manufacturing 

employees, along with the surplus urban manufacturing employees not yet deleted from 

the total urban manufacturing employment figures. After statistical corrections in both 

urban and TVE data, China was estimated to have approximately 112 million 

manufacturing employees at yearend 1998. The number declined to about 108 million in 

2000-01 and rose slightly to 109 million by yearend 2002. All of these estimates are 

based on the supposition that there is no overlap between TVE and official urban 

manufacturing employee figures. 

24
This report has demonstrated that manufacturing employment in China increased 

during the 1980s and early 1990s, peaked in about 1995-96, declined during the late 

1990s until 2000-01, and increased again in 2002. 

Future research priorities 

The following areas should have high priority for future data collection in China and 

future research on Chinese manufacturing employment: 

1. Migrant manufacturing workers. Publicly available data on China’s 

manufacturing employees do not provide enough information about how many 

migrant manufacturing workers there are in China and where they are working. 

Yet migrants from the rural areas are fueling the country’s manufacturing boom, 

and there are tens or hundreds of millions more surplus workers in agriculture, 

some of whom could migrate to join factories in the future. Migrant workers help 

keep China globally competitive in manufacturing. Further collection and 

dissemination of information on China’s migrant manufacturing workers are 

needed. 

2. Rural manufacturing employment. Much better data collection and reporting, and 

much more research, are needed to try to fill in some of the missing information 

on rural and town manufacturing employment. Reporting is routinely more 

thorough for city manufacturing units in China. 

3. Conflicting data. More work is needed by China’s statistical leaders and by 

analysts of labor force data to reconcile and make sense of the conflicting sets of 

manufacturing employment data so far released. Communication, coordination, 

and better statistical oversight are needed among the NBS, the Labor Ministry, the 

Ministry of Agriculture, and the State Administration for Industry and Commerce 

and with scholars who utilize China’s official labor force statistics. 

4. Labor force surveys. China needs to design, carry out, and publish results of labor 

force surveys using international standards and definitions. The surveys should 

cover the rural as well as the urban labor force. China has been conducting 

experimental labor force surveys, but most of the results have not yet been 

released. Reportedly, China will conduct a regular labor force survey in 2006 and 

begin publishing data from that survey. 

5. National economic census. During 2005, with reference year 2004, China 

conducted its first national census of the economy. Results from this census are 

expected to refine, correct, and update data on who works where in 

manufacturing. The census “is sure to find that private-sector employment is 

much higher than currently reported.”92 When results of the economic census 

become available at the end of 2005, the new information should be used to 

update research on China’s manufacturing sector.93

25
MANUFACTURING EARNINGS AND COMPENSATION IN CHINA 

With by far the world’s largest manufacturing workforce, at more than 100 million,94

China is widely known to have low labor costs. Statistics available for the first time for 

the entire country for 2002 now permit the estimation of those costs with some degree of 

precision. Employees in China’s city manufacturing enterprises received a total 

compensation of $0.95 per hour, while their noncity counterparts, about whom such data 

had not previously been generally available, averaged less than half that: $0.41 per hour. 

Altogether, with a large majority of manufacturing employees working outside the cities, 

the average hourly manufacturing compensation estimated for China in 2002 was $0.57, 

about 3 percent of the average hourly compensation of manufacturing production workers 

in the United States and of many developed countries of the world. Equally as striking, 

regional competitors in the newly industrialized economies of Asia had, on average, 

manufacturing labor costs more than 10 times those for China’s manufacturing workers; 

and Mexico and Brazil had manufacturing labor costs about 4 times those for China’s 

manufacturing employees. 

This report evaluates the quality and usability of China’s statistics on 

manufacturing earnings and labor compensation for 2002--the most recent year for which 

adequate data are available--and for the period since 1990. The analysis demonstrates that 

China has released just enough relevant data on average annual earnings and labor-related 

employer costs to derive 2002 estimates of annual labor compensation for 30 million city 

manufacturing employees95 and 71 million noncity manufacturing employees--those 

working in town and village enterprises (TVE’s).96 Combining the published earnings 

figures and adjusted labor compensation figures for these two groups results in a 

reasonable approximation of average 2002 labor compensation per manufacturing 

employee in China. A national time series on manufacturing labor compensation for 

China could not be developed due to the lack of earnings data for the country’s noncity 

manufacturing workers prior to 2002; however, data on trends in real (price-adjusted) 

earnings for city manufacturing employees from 1990 onward are available and show a 

sharply upward trend since 1998. 

Because China has not systematically collected and reported adequate data on 

actual hours worked by manufacturing employees for the whole year 2002 or, indeed, for 

any full year, this report uses published partial labor force survey information and a set of 

hypotheses to estimate annual hours worked by city and noncity manufacturing 

employees, thus calculating approximations of average 2002 hourly labor compensation 

in manufacturing for these two categories of manufacturing employees and for China as a 

whole. Labor compensation estimates are converted into U.S. dollars at the official 

exchange rate for 2002. 

The report also assesses the probable biases in China’s statistics on manufacturing 

earnings and total labor compensation. The analysis that follows argues that city 

manufacturing enterprises in particular have powerful incentives to underreport earnings 

and other elements of the compensation provided to their employees. The main purposes 

of underreporting employee compensation are to avoid taxes and to minimize required 

employer and employee payments to social insurance and employee housing funds 

administered by urban authorities. 

26
There is, however, a competing bias in city manufacturing employment and 

earnings data. Indirect evidence indicates that many city manufacturing workers are not 

included in these numbers at all. In particular, the lower paid migrant manufacturing 

workers seem to be considerably underrepresented in the reported urban employment 

data for cities, and the earnings of most of the comparatively poorly paid migrant workers 

in general also appear to be excluded from urban manufacturing earnings data. Whether 

the net result of these competing biases is to underreport or overreport earnings of the 

average urban manufacturing employee for 2002 is unclear; however, it is likely that the 

exclusion of the more stagnant earnings of many rural-to-urban migrants leads to some 

exaggeration of the trend of rising average earnings in city manufacturing for the 1990-

2002 period. 

The analysis that follows discusses the cost to employers of employee 

compensation and the competitiveness of Chinese manufacturing in the global economy. 

For comparative purposes, official exchange rates were used to convert compensation 

costs to U.S. dollars. The official exchange rate is the appropriate conversion rate for 

compensation cost comparisons, because it reflects the cost in U.S. dollars that employers 

must actually pay for Chinese labor. Compensation costs converted with the use of 

commercial exchange rates do not, however, indicate relative living standards of workers 

or the purchasing power of their income. Therefore, this report also includes estimates of 

the take-home pay of China’s manufacturing workers calculated using the purchasing 

power parity exchange rate between Chinese yuan and U.S. international dollars. 

As will be demonstrated in the analysis, the numbers frequently published in the 

global and U.S. popular media on the low compensation of China’s manufacturing 

workers ($0.40-$1.50 per hour) are within the realm of reasonable estimates. China is 

indeed a relatively low wage manufacturing environment, and the country also enjoys 

other advantages that give it a competitive edge over many other manufacturing locations 

around the world. 

The Bureau of Labor Statistics has been a leader in compiling international comparisons of hourly 

compensation of manufacturing workers over a wide range of countries. Despite its large and 

growing importance in world manufacturing, China has not been included in the comparisons 

because of difficulties in obtaining and interpreting that country’s data and because of concerns 

about the quality of the data. Although the two Monthly Labor Review articles by Judith Banister 

have greatly facilitated understanding of Chinese employment and compensation statistics, many 

problems with data availability, coverage, and reliability remain, as described in the articles. 

Therefore, the Bureau does not plan to include China in its regular comparisons of hourly 

compensation costs at this time. These articles and the associated report on the BLS Web site, 

which have been funded by the Bureau, are intended as first steps toward developing the 

measures necessary to include China in the regular comparisons series that currently includes 31 

countries. Because of the widespread interest in expanded country coverage, the Bureau is indeed 

considering providing data on China, along with data on some other countries, the quality of 

whose data is problematic, but in a separate format with appropriate annotations. As better data 

become available, China and other countries could be moved into the regular comparisons series. 

Division of Foreign Labor Statistics, Bureau of Labor Statistics 

27
Background 

The Bureau of Labor Statistics publishes estimates of hourly compensation costs for 

production workers in manufacturing for 31 economies on its Web site.97 Although most 

of the countries are developed countries with high-quality data, some developing 

countries with adequate data also are included. The Bureau is working to add countries, 

including China, to the published list, but BLS standards for the quality of statistics are 

high. Data for China are not yet in accord with BLS comparability definitions. (See Box 

1.) This report assesses the quality and completeness of those statistics which are 

available on manufacturing earnings and compensation in China. 

The subsequent analysis is based as much as possible on information published by 

China’s official statistical organizations. Most statistics for China are collected under the 

central guidance of the National Bureau of Statistics (NBS) and often are published jointly 

with the Ministry of Labor and Social Security (hereinafter, Ministry of Labor). 

Collecting data on manufacturing employment in TVE’s, however, is the responsibility of 

the Ministry of Agriculture, and data on the earnings of noncity manufacturing 

employees were first published for the year 2002.98 

Focusing on 2002, the most recent year for which adequate data are available, the 

upcoming discussion tabulates information on earnings, required social benefit payments, 

and other labor compensation and derives annual, monthly, and estimated hourly 

manufacturing labor compensation, in Chinese yuan, for urban, TVE, and all-China 

manufacturing employees. These estimates are then calculated in U.S. dollars at the 

official exchange rate. 

The annual data on labor compensation in manufacturing used in this report come 

from the annual yearend statistical reporting system. (China’s censuses do not ask for 

earnings data.) In China’s cities and, to a lesser extent, outside the cities, each enterprise, 

economic unit, small business, or self-employed individual or group is required to report 

employment and earnings data each year according to the group’s “labor situation” the 

previous year and at the previous yearend. The data are then compiled upward in a 

statistical reporting chain to the national government. Accountants or those who report 

employment and earnings figures on behalf of their enterprises or other work units (at 

least, those in urban areas) are given detailed instructions on how to report monthly, 

quarterly, yearend, and average annual figures on employment and earnings. The 

instructions are based on regulations released by the NBS, especially those released in 

1990, with further clarifications in 1998 and 2002.99

 In reporting annual statistics on employment and earnings, China’s NBS and 

Ministry of Labor use an administrative reporting system that ignores the progress China 

has made in the statistical definitions of “urban” and “rural” during the last several 

decades. As mentioned in the foregoing section on manufacturing employment in China, 

in statistical publications on China’s labor force data, employment and earnings data 

labeled “urban” actually refer to cities and exclude employees working outside narrowly 

defined city boundaries. Even factories located in suburbs, large industrial parks, and 

towns that have been officially established as urban places since the 1980s are excluded 

from the so-called urban statistics on employment and earnings. In the tables and charts 

of this report, statistics are faithfully shown as they were reported in official publications. 

In the text, the word “city” often is used to describe the “urban” data, simply because 

28
those data actually refer to city employees and their earnings. By contrast, the term “town 

and village enterprises” (TVE’s) seems to cover not only rural areas, but also factories in 

urbanized places outside narrow city boundaries. Accordingly, the text uses the word 

“noncity” to refer to TVE data. 

The concept of compensation 

The BLS measures of hourly compensation costs include both data on hourly direct pay 

(which includes pay for time worked, pay for vacations and holidays, bonuses, in-kind 

pay, and other premiums) and data on employer social insurance expenditures and other 

labor taxes (which include employer expenditures for legally required insurance 

programs and contractual and private benefit plans, as well as other taxes on payrolls or 

employment). 

China’s statistical authorities at the NBS also try to use an internationally 

recognizable definition of employee compensation in the calculation of China’s gross 

domestic product. The NBS defines what it variously translates as “compensation of 

employees” or “laborers’ remuneration” (laodongzhe baochou) as follows: 

Laodongzhe baochou refers to the whole payment of various forms earned by the 

laborers from the productive activities they are engaged in. It includes wages, 

bonuses, and allowances the laborers earned in monetary form and in kind. It also 

includes the free medical services provided to the laborers and the medicine 

expenses, transport subsidies, social insurance, and housing fund paid by the 

employers.100 

This passage suggests that China’s government either collects data on these various 

components of worker compensation or at least estimates them for its calculations of 

China’s gross domestic product. 

The subsequent analysis begins with a description of Chinese earnings statistics 

on manufacturing workers and then describes the sources and methods of estimating the 

nonearnings portions of compensation--that is, the social insurance expenditures that 

employers must pay on behalf of employees. Two issues that are relevant to the 

estimation of social insurance expenditures, namely, the difference by city in mandatory 

social insurance contribution rates and the likely underreporting of earnings to minimize 

tax and social insurance contributions, are discussed. The report then examines the 

difficult issue of estimating working time in manufacturing in order to construct estimates 

of compensation on a per hour basis. Following an analysis of the compensation of 

workers in export-oriented industries and of migrant workers, the discussion touches on 

how manufacturing earnings in China have changed over time and how the compensation 

estimates in this report compare with those published in other venues. Finally, the 

implications of the current research results for China’s competitiveness are explored. 

Throughout the analysis, separate estimates are made for urban workers and TVE

workers, because the data sources and the working situations that relate to each group are 

different. Where possible, national estimates combining the two groups are made as well. 

29
Reported manufacturing earnings in Chinese currency 

Earnings and other compensation data for manufacturing workers in China are poorly and 

partially reported. The available data on “wages” or “earnings” come from the annual 

yearend reporting system, and the fragmentary figures are published in the China Labor 

Statistical Yearbook and, for TVE employees, in China Village and Town Yearbook 

2003.

101 Average annual remuneration for manufacturing workers is called “wages” 

(gongzi) when referring to “staff and workers,” but is called “earnings” or remuneration 

(laodong baochou) when referring to the other employees of urban manufacturing units. 

The two terms appear to mean the same thing, and both are defined as follows: 

The total wages and total earnings are calculated this way: They include whatever 

is paid to or for the workers in money or in kind according to relevant regulations, 

including salaries paid for a certain time period or payments based on piece work, 

bonuses, allowances, subsidies, overtime pay, and pay for dangerous or 

challenging duty.102 

In this report, the term “earnings” designates the wages or earnings of both urban and TVE

manufacturing employees in cash and in kind, as reported to statistical and tax 

authorities. The term does not include the social insurance payments that employers are 

required to pay to city or county authorities on behalf of their employees or the welfare 

fund payments given to employees in the enterprises. The terms “compensation” and 

“total compensation” include earnings plus these other elements of total labor 

compensation in manufacturing. These definitions correspond to the definitions used by 

the Bureau of Labor Statistics in its international report on hourly compensation costs. 

Table 6 shows that the 30 million on-post employees of manufacturing enterprises 

in China’s cities had average reported earnings of 11,152 yuan for the year 2002.103 Of 

these employees, 95 percent were on-post (not laid-off or unemployed) “staff and 

workers” whose earnings that year averaged 11,001 yuan, and 5 percent were the 740,000 

“other” city manufacturing workers who averaged much higher earnings of 17,237 yuan 

in 2002 (in part because this category includes foreign employees of China’s 

manufacturing companies and reemployed or still employed retirement-age workers with 

high seniority, and both these groups probably get higher earnings than the average for 

“staff and workers”). 

The 11,152-yuan average annual earnings figure of the 30 million workers in 

manufacturing urban units masks a wide range of earnings in different urban 

manufacturing subsectors, as shown in table 7. For example, the lowest-paid group of city 

manufacturing workers is the 3 million textile industry workers, whose earnings average 

7,268 yuan per year. The 5 million city manufacturing workers in the subsectors of 

timber and bamboo products, food processing, nonmetal mineral products, paper 

products, furniture manufacturing, and “other” manufacturing also earn less than the 

average urban worker: their reported average annual earnings are less than 9,000 yuan. At 

the other end of the pay spectrum, the 7.5 million city manufacturing workers in tobacco 

processing, electronics and telecommunications, petroleum processing, ferrous metal 

smelting, transport equipment manufacturing, and medical and pharmaceutical products 

all have average annual earnings of 13,000 yuan or higher. 

30
The recorded 9 million laid-off manufacturing workers still nominally connected 

to their manufacturing units averaged a small living subsidy of 2,213 yuan. (See table 6.) 

This kind of payment might be considered similar to payments of unemployment 

compensation for laid-off or unemployed workers in developed countries. 

In years prior to 2002, earnings data were not published for manufacturing 

workers outside the cities. For the reported 71 million manufacturing TVE employees in 

2002, the Ministry of Agriculture published, for the first time, the total earnings 

(laodongzhe baochou) paid out for that entire year in all manufacturing TVE’s.104 Average 

annual earnings per worker are derived in table 6 in the same way that the average annual 

earnings are calculated for urban manufacturing workers. TVE manufacturing workers 

averaged 6,927 yuan in reported earnings in 2002, 62 percent of the average earnings that 

year for employees of urban manufacturing units. Workers in large-scale manufacturing 

TVE’s had higher average 2002 earnings of 8,899 yuan, 80 percent of the average reported 

earnings for employees of urban manufacturing units. 

What forms of remuneration are included in the average annual earnings figures 

for China’s manufacturing employees? Exhibit 1 lists all the items whose value is 

required to be included in earnings data reported by enterprises in urban China for their 

on-post manufacturing staff and workers, based on written instructions to enterprise 

accountants and statistical personnel. Most forms of income, benefits, and subsidies in 

cash and in kind are on this list. Cash salary and earnings payments, housing and 

transportation provided to workers, meals given to them, and the value of income tax and 

social insurance payments deducted from earnings and remitted to the government on 

behalf of employees are all required to be included in the “total earnings” figure, based 

on relevant reporting regulations. 

One group of benefits that is provided by some of China’s manufacturing 

enterprises to employees, but that is specifically excluded from the earnings figures, is 

the use of a company medical clinic or the payment of some employee hospital costs.105

It would seem that this is an important group of benefits which, conceptually, ought to be 

included in earnings data. But many countries share this shortcoming in earnings 

statistics, with the result that the Bureau of Labor Statistics specifically excludes the costs 

of medical clinics in plant facilities from its comparative international data on labor 

compensation in manufacturing.106 This article does not include any estimation of these 

particular medical benefits which are missing from China’s earnings data. 

One important difference between China’s earnings data shown in table 6 and the 

data used by the Bureau in its international comparisons is that the Bureau data relate 

only to production workers, while the Chinese data relate to all employees--that is, both 

production and nonproduction workers. Because production workers typically have lower 

wages than those of those of nonproduction workers, it is likely that the inclusion of both 

types of workers in the Chinese data leads to higher earnings levels. However, the 

production worker data necessary to match the BLS concept are not available for China, 

so it is unclear how much lower Chinese earnings for production workers would be. 

 The earnings data do not include figures for the comparatively small privately 

owned manufacturing groupings and the self-employed manufacturing workers in 

China’s cities. These two categories of workers together totaled 8.2 million (22 percent of 

China’s reported total of urban manufacturing workers) in 2002, according to China’s 

State Administration for Industry and Commerce. This feature of China’s earnings data 

31
parallels the same dearth in manufacturing earnings data from many countries. For 

reasons of practicality, if a country does not include earnings for employees in small 

manufacturing units in its earnings data, the Bureau also excludes the employees and 

compensation for these units from its estimates of hourly labor compensation in 

manufacturing.107 Self-employed workers in manufacturing also are excluded from the 

Bureau’s estimates. Using data from manufacturing censuses, the Bureau has researched 

the effect of excluding such earnings and found it to be small. 

Estimating total 2002 compensation in manufacturing 

To estimate total compensation for China’s manufacturing employees, it is necessary to 

add to the reported earnings the other components of total compensation, including social 

insurance payments paid by employers on behalf of employees, as well as other payments 

to or for employees that are not included in the earnings data. 

In the urban areas, employers pay considerable sums for social welfare benefits 

on behalf of their employees, above and beyond the employees’ earnings. China’s cities 

today have built, or are in the process of building, municipal social insurance funds and 

housing funds to which both employers and employees are required to contribute each 

month.108 There are six kinds of funds: an old-age pension fund, a medical insurance 

fund, an unemployment insurance fund, a workers’ compensation fund, a maternity leave 

fund, and a fund in which money is set aside for each worker by name--money that the 

worker can use to help buy an apartment. These monthly payments by employers to city 

governments are mandatory, and stiff penalties are specified for noncompliance,109 but 

noncompliance is rampant and penalties are rarely enforced. 

The payments deducted from employee earnings for the six public funds and 

remitted to city governments are included in the reported earnings data (see exhibit 1), 

but the part paid by employers is excluded.110 Legally required payments to government 

social insurance and employee benefit programs are included in the BLS concept of 

compensation,111 so, in order to adjust the reported manufacturing earnings to include 

legally required employer social insurance payments and other labor compensation costs, 

one needs to know the overall percentage of the total earnings bill that urban 

manufacturing employers paid in 2002 for social insurance and required housing fund 

payments, as well as other employee benefit payments. China’s Ministry of Labor 

conducted a survey of 11,704 urban enterprises in 51 large and medium-sized cities 

throughout the country and collected all relevant worker compensation data from these 

organizations for the year 2002.112 This article uses the results of that large survey to 

estimate average labor compensation costs in urban manufacturing above and beyond the 

reported earnings data for 2002 given in table 6. On the basis of the results of this Labor 

Ministry survey, the reported 2002 annual earnings should be increased by an amount 

equivalent to 53.8 percent of earnings to estimate the following labor compensation costs 

(expressed as a percentage of urban earnings) actually paid by employers:113 

32
Cost Percent 

Required employer social insurance payments to the government... 28 

Required housing fund payments...................................................... 4 

Additional employee welfare costs not included in earnings............ 12 

Other labor-related costs not specified in detail................................ 10 

In table 8, therefore, average 2002 total compensation for employees of urban 

manufacturing enterprises is estimated to be 17,152 yuan. 

Note that the amount China’s urban employers are required by law to remit to the 

government every month as the employer contribution to the social insurance system and, 

in some cities, the home purchase fund varies from city to city.114 For example, the 

following tabulation shows the additional amount, expressed as a percentage of earnings, 

that manufacturing employers in three cities are required to contribute:115 

Contribution 

Changshu City, 

Jiangsu province 

Wuxi City, 

Jiangsu province 

Beijing 

municipality 

Old-age pension fund....................... 16.5 22.0 20.0 

Medical insurance fund.................... 8.0 8.0 9.0 

Unemployment insurance................ 2.0 2.0 1.5 

Workers’ compensation insurance... .6-.8 -- 1.0 

Maternity leave insurance................ 1.0 -- -- 

Employee housing fund................... -- -- 8.0 

Not only do the required employer contributions vary by municipality and city, but also, 

the amounts have been increasing over time. Therefore, it is likely that the legally 

required employer contribution to the social insurance funds for the average 

manufacturing employee has increased since 2002. 

The inclusion in total labor compensation of the amorphous, vaguely reported 

categories of welfare costs and other unspecified labor-related costs just discussed may 

help offset some of the likely downward biases in the basic earnings data. To minimize 

individual and corporate taxes and required social insurance payments, urban employers 

tend to underreport earnings to the extent possible, neglecting to include some in-kind 

benefits in the reported earnings and offloading as many employee subsidies and benefits 

as possible into the welfare fund category or “other” labor compensation category. 

(Underreporting of urban manufacturing employment and earnings is discussed shortly.) 

For TVE manufacturing employees, there is ample evidence that the reported 

earnings total may capture almost all of their total compensation, because TVE workers do 

not have many of the social insurance and other welfare benefits that urban employees 

often get. For example, by the end of 2002, the number of rural and smalltown workers 

with any rural social pension insurance was minuscule.116 China’s urban towns and rural 

areas have very weak or nonexistent social benefit systems for pensions, medical 

insurance, unemployment insurance, workers’ compensation, and the like. Pension and 

medical insurance systems paid into by employers and employees essentially do not exist 

in China outside of cities today.117 A survey of large manufacturing enterprises in 

Nanjing Municipality, the capital of Jiangsu Province on the country’s east coast, found 

that welfare benefits for workers, above and beyond earnings, for the years 1994-2001 

33
averaged 36 percent of the earnings in urban state-owned manufacturing enterprises, but 

only 16 percent of the earnings in unusually large manufacturing TVE’s in counties under 

Nanjing’s administration.118 Now, on the one hand, these TVE’s surely had an 

exceptionally high level of welfare benefits compared with those offered by all 

manufacturing TVE’s in China during those years, both because TVE’s in counties near 

major cities have better social welfare benefits than TVE’s elsewhere and because large 

TVE’s have better benefits than average-sized TVE’s. On the other hand, average 

manufacturing TVE worker welfare benefits in 2002 were very likely a higher percentage 

of those workers’ total compensation than in earlier years. Therefore, pending the 

discovery of better data for 2002, the average total of social insurance and other welfare 

benefits for China’s manufacturing TVE employees can be tentatively estimated to be in 

the range from 0 percent to 16 percent of their total earnings. A reasonable estimate of 

such employee benefits for the average TVE employee in 2002 is 8 percent, the midpoint 

of the range. Table 8 estimates average annual total compensation for TVE employees at 

7,481 yuan. 

Underreporting of urban manufacturing employment and earnings 

China’s people and work units were unaccustomed to paying income taxes, value-added 

taxes, corporate income taxes, or high payments for social insurance during the Maoist 

decades from 1949 to 1978. The government extracted the money for its budget in other 

ways, but not so visibly as the way taxes are taken out now. Individuals got benefits in 

both urban and rural areas, while earnings were kept very low. Today, during the postMao economic reform era, employers appear to have developed a culture of tax 

avoidance. For example, when foreign and multinational companies come to China and 

attempt to acquire, or set up a joint venture or merger with, a (usually state-owned) 

Chinese company, the foreign company insists on engaging in a due diligence process to 

determine whether the joint venture, merger, or acquisition is in the interests of its owners 

and shareholders. The auditors and accounting companies frequently discover that the 

target company has two sets of books: “Most domestic enterprises keep separate sets of 

‘management accounts’ and ‘tax accounts’.”119 The “tax ledger” is the set of employee 

and financial data reported to the tax and other authorities, and the “administrative 

ledger” records a more accurate picture of the numbers of employees, their actual 

earnings, the true costs and income of the company, its actual profits, and more. The tax 

ledger is designed to minimize tax exposure, particularly corporate income taxes, valueadded taxes, personal income taxes for employer and employees, and required social 

benefit payments. It is believed that non-public-sector domestic Chinese enterprises avoid 

taxation and social benefit payments to an even greater extent than the state-owned and 

collective-owned enterprises. 

Such tax avoidance in the manufacturing sector probably has a number of 

implications.120 First, many urban employees, especially those who are in-migrants and 

do not have city residence permits or those who are temporary or part-time workers, may 

be left off the books entirely, at least with regard to what is reported to authorities. When 

they are, their employment is kept informal, and neither the employee nor his or her 

earnings, which are paid in cash, are reported. This means that the employee can avoid 

34
paying income tax and any required social insurance deductions, while the employer can 

avoid paying the required social insurance payments for the employee. As a result, actual 

manufacturing employment may be underreported in China’s statistics, especially in the 

urban figures. 

Second, even when employment is reported to authorities, both employer and 

employees tend to collude to minimize reported earnings. Employers in urban areas are 

required to remit to the city government social insurance and other payments that are 

calculated as a percentage of the unit’s reported total earnings. These required payments 

are high by international standards and have been increasing rapidly: “high contribution 

rates are leading to high rates of evasion in the basic pension system,” as well as evasion 

of other required social welfare payments.121 Many employers might perceive that the 

required payments are squeezing their profits and are burdensome; they would therefore 

have an incentive to underreport employee earnings. Some of the money actually given to 

employees (as bonuses, overtime pay, or financial subsidies of various kinds) may not be 

reported as earnings, instead getting shifted to the welfare fund category or other 

unspecified labor-related cost category; thus, it is important to include these labor cost 

categories in a realistic estimate of urban manufacturing labor compensation in China. It 

is also likely that many urban enterprises underreport or leave out of reported earnings 

the value of some benefits provided in kind to employees (for example, meals, housing, 

transportation, and food distributions). Therefore, it is likely that even the earnings of 

urban manufacturing workers whose employment is reported to authorities are 

systematically underreported. 

Those employees whose employment is not reported to the authorities at all, 

whether in urban or rural areas, are usually paid lower wages than other employees. 

According to anecdotal evidence, the going rate for an unskilled rural or migrant worker 

in nonagricultural work in China today is about 500-600 yuan per month, plus whatever 

benefits it is essential to provide, such as simple meals, dormitories, and emergency 

medical assistance. Some rural workers are paid as little as 300 yuan per month, while 

more desirable workers might get as much as 800 yuan monthly. If unreported workers in 

the manufacturing sector average cash pay of 550 yuan per month, and if their simple 

accommodations and food cost another 200 yuan per month, then their earnings total 750 

yuan, or U.S.$91, per month, but only when they are actually working. Thus, if, for 3 

months of the year, they are not engaged in paid employment while they are planting and 

harvesting and while taking time off for holidays, illnesses, and personal business, then 

their annual take-home cash plus in-kind benefits would be 6,750 yuan per year. This 

estimate is close to the reported data that yield earnings of 6,927 yuan for TVE

manufacturing workers in 2002. 

Annual dollar compensation for manufacturing workers 

To translate reported average annual earnings for China’s manufacturing workers into 

dollars (see table 8), the analysis that follows uses official nominal exchange rates 

between U.S. dollars and Chinese yuan. The Chinese yuan was pegged to the U.S. dollar 

at 8.28 yuan per dollar for a decade from 1994 to August 2005; this exchange rate is the 

correct one for 2002 data.122 

35
On the basis of reported earnings data only, China’s 30 million employees of 

urban manufacturing units had average 2002 earnings of 11,152 yuan, or U.S.$1,347, at 

the official exchange rate. China’s manufacturing workers in TVE’s averaged 6,927 yuan, 

or U.S.$837, in reported annual earnings in 2002. (See tables 6 and 8.) After adjusting 

reported earnings to account for additional indirect and direct remuneration for 

employees, table 8 estimates that China’s urban manufacturing employees received an 

average of about U.S.$2,071 in annual labor compensation for 2002, while TVE

manufacturing employees got approximately U.S.$904. It is important to note, however, 

that TVE employment is highly desirable to China’s rural workers because their TVE

earnings are higher than the earnings they can derive from agriculture.123 

Monthly labor compensation in manufacturing 

To calculate the monthly compensation of TVE manufacturing workers from their average 

annual labor compensation, it would be helpful to know whether all or even most of the 

reported 71 million TVE manufacturing employees work most of the year and what 

proportion are part-year or part-time workers. As noted earlier, it is likely that many 

unreported workers do not work year round. If the assumption is made that these 71 

million reported workers represent year-round workers, then their average monthly total 

compensation was about U.S.$75. (See table 8.) Urban manufacturing employees are, 

generally speaking, year-round, full-time employees. Monthly urban manufacturing labor 

compensation was U.S.$173. 

Annual hours worked in manufacturing 

To calculate the hourly labor compensation of China’s manufacturing employees in 2002 

would require data on the average number of hours actually worked per employee during 

that year. Some data have been published on China’s urban manufacturing employees’ 

average hours worked in 2002. Specifically, China’s NBS and Labor Ministry have been 

conducting a labor force survey for some years. Most results of this survey have not been 

published, but data on hours worked by urban manufacturing workers during 2 reference 

weeks of 2002 have been published. According to the survey, urban manufacturing 

employees in China actually worked an average of 44.86 hours during the 7-day period 

from May 9 to May 15, 2002, and 46.0 hours during the reference week of September 24-

30, 2002.124 Averaging those two figures results in the estimate that, during 2002, in the 

weeks when urban manufacturing employees actually worked at all, they averaged 45.4 

hours of work per week. 

The remaining problem is to estimate the average number of weeks actually 

worked by urban manufacturing employees in China during 2002. Because urban 

employees are supposed to receive a total of 10 days of statutory holidays per year, it is 

reasonable to assume that urban manufacturing employees get 2 weeks of public holidays 

per year. It is also reasonable to assume that urban manufacturing employees, on average, 

missed 1 week per year for some combination of illness, injury leave, and maternity leave 

and 1 week per year for personal leave plus work stoppages and downtime due to 

36
equipment repair and shortages of electricity and manufacturing inputs. On the 

assumption that China’s urban manufacturing workers actually worked 48 weeks during 

2002, averaging 45.4 hours per week, the average annual hours worked is estimated to be 

2,179 hours. 

No data have been published or released on average hours worked per week by 

rural or TVE manufacturing employees, even though such data were collected for 

September 24-30, 2002, in China’s October 2002 labor force survey.125 All of the 

calculations that follow are therefore strictly hypothetical. Because labor laws are more 

explicit and more enforced in cities than outside the cities, it is likely that, during each 

week that manufacturing employees are actually working, those in cities work fewer 

hours than those outside the cities. Therefore, it is in this case reasonable to assume that 

TVE manufacturing workers averaged 50 hours of work per week in 2002 during those 

weeks that they were working. Also, assuming that TVE manufacturing employees took 2 

weeks off for Spring Festival (Chinese New Year) and stopped work for another 2 weeks 

for reasons such as illness, injury, family emergencies, personal leave, and factory 

downtime due to shortages and breakdowns, this would leave 48 weeks of actual work 

per year. In addition, some TVE manufacturing employees who work in the same county 

as their home village also may be involved in agriculture during peak seasons. This 

assumption is made because most TVE workers come from rural households that still 

grow crops, and farm households tend to need all the labor they can get for planting and 

harvesting. However, migrant manufacturing workers would not be able to get home to 

participate in agriculture, and some manufacturing workers who live close to their family 

homes have left agriculture altogether. It is therefore reasonable to assume that, say, onehalf of TVE manufacturing workers take leave from their manufacturing jobs for 2 weeks 

for peak planting time twice a year (assuming double-cropping, on average) and 2 weeks 

for each of two peak harvest seasons, thus working 40 weeks per year in manufacturing, 

but that the other half of TVE manufacturing workers do not do agricultural work and, as a 

consequence, work 48 weeks in manufacturing each year. Under these assumptions, TVE

manufacturing workers would have averaged 44 weeks of actual factory work in 2002 at 

50 hours per week, totaling 2,200 hours for the year. 

It is possible that the above estimates for the numbers of hours worked, on 

average, per year by manufacturing employees in city and noncity factories are too low. 

Some investigations in China’s export zones in Guangdong and other coastal provinces 

have discovered many factories in which the employees typically work the entire year, 

with a 2-week holiday at Chinese New Year. In many such export-oriented factories, 

employees usually work 6 or 7 days each week, totaling 60 to 80 hours per week in 

whatever period constitutes the peak season for that manufacturing subsector.126 This 

season can last up to 8 months a year. Average yearly hours actually worked per 

employee might be as high as 4,000 hours in some China manufacturing enterprises. 

Suppose that, in those hardworking Guangdong factories, the average urban wage in 2002 

was 14,958 yuan, as discussed shortly and as reported in table 9, and suppose also that 

urban earnings must be increased by 53.8 percent to include all employer social insurance 

payments, welfare costs, and other labor costs, giving an average annual labor 

compensation of 23,005 yuan, or $2,778. Then, if some city manufacturing employees 

worked 4,000 hours in 2002 for that income, hourly compensation was $0.69 per hour. 

Outside Guangdong’s cities in Guangdong Province, reported 2002 average earnings in 

37
industry were 8,345 yuan. (See table 9 and discussion that follows.) Increasing this figure 

by 8 percent to adjust for employer social insurance payments on the part of employers 

results in a total average labor compensation of 9,013 yuan, or $1,088, in 2002. For those 

factories whose workers put in 4,000 hours of production work that year, per hour 

average labor compensation was $0.27. This illustration emphasizes why it is important 

to determine the actual average number of hours worked in each year for both city and 

TVE manufacturing employees. 

Data from China’s 2000 census confirm that, generally speaking, manufacturing 

employees in China work a lengthy week; at least, they did during the last week of 

October 2000. The census indicated that 58 percent of manufacturing workers had 

worked 6 or 7 days the previous week; however, the census may have classified tens of 

millions of part-year, seasonal manufacturing workers from rural areas and small towns 

as farmers.127 Such rural (probably called TVE) manufacturing workers would put in far 

fewer hours in manufacturing per year than those counted in the census or those working 

year round in coastal-zone factories. Thus, the percentage of workers who worked 6 or 7 

days probably was lower than 58 percent. 

It is not known whether manufacturing employees whose factories sell only to 

China’s domestic market work about the same number of hours per week, month, or year 

as does the average employee of export-oriented factories. Of China’s reported 70.9 

million TVE manufacturing employees in 2002, for example, only 13.4 million were 

reported to be producing for export, while 57.5 million were apparently producing only 

for the domestic market.128 An adequate estimate of average annual hours worked must 

take into account both of these categories of manufacturing workers--those who produce 

for export and those who produce for domestic sale. 

For China, legal limits on working hours or overtime hours are not likely to yield 

realistic estimates of actual hours worked. Factories routinely report that they are abiding 

by the regulations when, in fact, employees are working more hours per day, and many 

more hours per week or month, than the statutory limits. One purpose of the double 

bookkeeping in China’s factories is to report compliance with laws on minimum wages 

and maximum permissible overtime hours when, in reality, the factory routinely violates 

the laws. Generally speaking, grassroots investigators report that the factories do not 

claim that they paid more total earnings per month or per day to the employees than they 

actually paid; rather, they underreport the actual hours worked to earn the reported 

monthly or daily income. 

Hourly labor compensation in manufacturing 

Despite the limitations on estimates of annual hours worked, it is possible to produce 

reasonable estimates of hourly compensation costs for manufacturing workers in China, 

as is shown in table 8. According to these estimates, compensation for employees of 

urban manufacturing units was about U.S.$0.95 per hour of work and for TVE

manufacturing employees was about U.S.$0.41 per hour. 

The analysis presented herein combines labor compensation estimates for the 

reported 71 million TVE manufacturing employees and the 30 million manufacturing 

employees of urban units to derive estimates for annual, monthly, and hourly labor 

38
compensation in China’s manufacturing sector. As shown in table 8, these 101 million 

Chinese manufacturing employees received an average of approximately U.S.$1,252 in 

labor compensation in 2002, a figure that works out to about U.S.$104 in monthly labor 

compensation and implies an hourly labor compensation of around U.S.$0.57 for China’s 

manufacturing employees.129

How does that U.S.$0.57 compare internationally? Chart 4 shows manufacturing 

hourly compensation costs in China in relation to the same costs in several other 

countries. Chinese costs are 3 percent of those in the United States, according to data 

from the BLS series. Even compared with some of the lower cost countries in the series, 

Chinese costs are low: a quarter of the cost level in Brazil and Mexico and less than a 

tenth of the average of Hong Kong, Korea, Singapore, and Taiwan.130

Purchasing power of take-home earnings for manufacturing workers 

Prices of goods and services vary greatly among countries, and the official exchange rate 

is not a reliable indicator of the relative difference in prices between China and other 

countries. Prices for most purchases in China are low, so the dollar figure of U.S.$0.57 in 

hourly labor compensation does not adequately capture the purchasing power of the 

incomes of China’s manufacturing workers. To more closely approximate the purchasing 

power of Chinese manufacturing worker incomes in U.S. dollars, some type of 

purchasing power parity (that is, the amount of yuan required to purchase the equivalent 

of $1 of goods and services in China) is needed. One way to better account for different 

purchasing power of different currencies is to utilize the “purchasing power parity” (PPP) 

exchange rate as estimated by the World Bank based on the cost of a comparable 

“basket” of goods in the two currencies, yuan in China and dollars in the U.S. “PPP rates 

allow a standard comparison of real price levels between countries.”131 

Although purchasing power parities provide a better measure of differences in 

relative price levels than do commercial exchange rates, there are still important 

limitations in using them to construct comparisons of worker income. For example, the 

purchasing power parities used may not accurately reflect the actual purchasing patterns 

of manufacturing workers, and the price data used to construct the parities may not 

correctly approximate the relative prices of many goods and services. (For further 

information see Glossary and Definitions: Currency; PPP.) 

In theory, use of market or commercial exchange rates is most appropriate for 

some purposes, and use of PPP exchange rates is the best method for other purposes: 

PPP is not appropriate for everything. Trade and capital flows, unlike the bulk of 

GDP, are actually transacted at market exchange rates, and should be converted 

into dollars at those rates. PPP is useful in showing how much a country’s money 

is worth in its home market, but it does not measure effective purchasing power 

across borders. What matters for businesses that trade internationally is China’s 

buying power in current-dollar terms.132 

This article gives manufacturing earnings and total labor compensation in Chinese 

domestic currency and in dollars at commercial exchange rates. The cash portion of 

39
income is then calculated in PPP international dollars. These alternative estimates allow 

us to select the appropriate measures for different purposes. 

To use PPP exchange rates, one should estimate the proportion of earnings that 

employees actually get to spend in the form of take-home pay, net of deferred 

compensation. (Total labor compensation costs per hour worked do not provide an 

accurate portrayal of worker income because they include costs that are not paid directly 

to the worker.) This calculation is complex for urban manufacturing employees, because 

their take-home pay is composed of part of reported earnings (reported earnings minus 

deductions for income tax and required employee social insurance payments) plus other 

cash payments that have been kept out of the earnings category in order to minimize tax 

and social insurance payments for employer and employee. Statistics are not available on 

take-home pay as a percent of reported earnings, but in some cases take-home pay is 

actually much higher than reported earnings because of the non-wage cash payments to 

employees. For a simple illustration of the purchasing power of the take-home pay of 

urban manufacturing employees, this author will simply assume that for urban 

manufacturing workers in 2002, their take-home pay is the same as reported earnings 

because, after taxes and social insurance payments have been deducted from earnings, the 

urban manufacturing employees have received other non-taxable cash payments from 

their employer. 

As shown in tables 6 and 8, manufacturing employees in urban units received 

reported earnings averaging 11,152 yuan for the whole year 2002. Assuming that their 

actual take-home pay was approximately the same as reported earnings, for reasons 

discussed above, their cash income for the year was about U.S.$1,347 based on the 

commercial market exchange rate, and PPP U.S.$6,263 in international PPP dollars. (For 

calculating labor compensation in international dollars, multiply labor compensation in 

dollars at the official exchange rate times 4.65.)133 This means that the average city 

manufacturing employee in China in 2002 could purchase goods and services that gave 

the worker and family a living standard equivalent to annual take-home pay of about 

U.S.$6,300 in the U.S. City manufacturing workers averaged take-home pay of about 929 

yuan or U.S.$112 per month, which is equivalent to PPP U.S.$522. On an hourly basis, 

take-home pay of Chinese city manufacturing workers was about 5.12 yuan or U.S.$0.62, 

equivalent to PPP U.S.$2.87. They could purchase about what an American worker 

could buy with take-home pay of almost $3 per hour. 

Of course the TVE manufacturing employees have much lower living standards. 

In their case, most of their income is cash, very little if any is deducted for required 

income tax and social insurance payments, but other non-wage cash benefits are probably 

modest as well. Again, as an illustration, this author assumes that actual take-home pay is 

about equivalent to reported earnings. Tables 6 and 8 show that TVE employees averaged 

earnings of 6,927 yuan for the entire year 2002, which was equivalent to U.S.$837 and 

PPP U.S.$3,890. Therefore, the living standard of China’s TVE manufacturing 

employees was equivalent to that of an American worker with annual take-home pay of 

less than $4,000. Monthly take-home pay for TVE manufacturing workers was about 577 

yuan or U.S.$70, with purchasing power equivalent to PPP U.S.$324. Hourly cash in 

hand for TVE manufacturing employees in China was approximately 3.15 yuan or 

U.S.$0.38, which had purchasing power of about $1.77 in international PPP dollars. 

40
 These PPP figures give us a feel for the purchasing power of the take-home pay of 

China’s manufacturing employees. Urban manufacturing workers in China are getting 

cash in hand that almost U.S.$3 per hour in cash would buy in the U.S., while China’s 

rural and town manufacturing workers receive less than U.S.$2 in international 

purchasing power parity dollars. Overall equivalent buying power of cash income for 

China’s manufacturing workers is about PPP U.S.$2.10 per hour of work. 

Manufacturing labor compensation in key export regions 

China’s urban manufacturing earnings statistics are reported by province, which 

facilitates estimating urban manufacturing labor compensation for the leading export 

centers. Using the same ratio of additional compensation to earnings, namely, 53.8 

percent, as in table 8, table 9 adjusts the earnings of urban manufacturing workers to 

derive annual, monthly, and hourly labor compensation for the city manufacturing 

workers of four leading provinces in China’s manufacturing import and export trade. 

(Actual levels of additional compensation as a percentage of earnings vary by province 

and by municipality, but data are not available to adjust earnings by using different 

multipliers for the urban manufacturing workers in different provinces.) 

The three provinces of the Yangtze River Delta have a wide range of urban 

manufacturing earnings and labor compensation. As shown in table 9, Shanghai’s 1.3 

million city manufacturing workers are comparatively highly paid in the Chinese context. 

Their 2002 labor compensation averaged about U.S.$4,078, and hourly compensation 

was approximately U.S.$1.87. Manufacturing workers in Zhejiang, Jiangsu, and 

Guangdong had lower labor compensation than Shanghai, but still higher than the 

national average. 

These city manufacturing earnings statistics for China’s leading exportmanufacturing regions do not yield a true picture of the earnings paid by manufacturing 

enterprises in those provinces. In the first place, it is not certain that the earnings of most 

migrant manufacturing workers in the cities of the aforementioned provinces are included 

in the urban manufacturing earnings data. Second, no wage data are reported for the socalled rural manufacturing workers by province, nor are TVE manufacturing earnings 

figures reported by province. However, reported earnings statistics are available by 

province for TVE industry (gongye) employees. Nationally, 92.4 percent of TVE industry 

workers are manufacturing employees, and wages of these manufacturing workers are 

similar to those of other industry workers. Therefore, TVE industry earnings by province 

can be used to estimate manufacturing earnings. 

Table 9 also reports 2002 TVE industry earnings and derives labor compensation 

for the same regions. Like their urban counterparts, TVE industry workers in these regions 

have higher earnings than the national average. Shanghai and Zhejiang TVE industry 

employees were the highest paid, earning U.S.$0.71 per hour in the Shanghai suburban 

and rural areas and U.S.$0.60 an hour in Zhejiang Province’s rural and industrial zones 

outside of its cities. Noncity industry workers in Jiangsu and Guangdong Provinces were 

not as well paid, receiving U.S.$0.48 and U.S.$0.49 per hour, respectively. 

What is the purchasing power of take-home pay for the manufacturing workers in 

these exporting provinces? In international dollars, TVE industry workers have the 

41
equivalent of PPP U.S.$2.08 per hour of work to spend in Jiangsu province, $2.13 in 

Guangdong province, $2.60 in Zhejiang and $3.05 in Shanghai Municipality. The city 

manufacturing workers take home on average the equivalent of PPP U.S.$3.02 in Jiangsu 

province, $3.46 in Zhejiang province, $3.86 in Guangdong province, and $5.66 in the city 

districts of Shanghai, in terms of the purchasing power of their cash income. We can 

therefore summarize that rural (noncity) manufacturing workers in China’s main export 

regions receive take-home pay that is equivalent in purchasing power to about 2-3 U.S. 

dollars per hour of work, while city manufacturing workers in the main exporting 

provinces earn the purchasing power equivalent of 3-6 U.S. dollars per hour. 

Earnings of migrant manufacturing workers 

In theory, if a worker has migrated from a village to a city and is employed in a 

manufacturing enterprise, the employer should report the migrant’s job and earnings in 

the “manufacturing staff and worker” category. But in practice, in most cities of China, 

migrants who do not possess permanent-resident documents are apparently not eligible 

for urban social insurance and housing benefits: 

Contracted rural migrant laborers are supposed to be covered [in the social basic 

pension system] as well. While the inclusion of rural migrant labor in urban areas 

would also reduce the dependency ratio because of the concentration of migrant 

laborers in the young working age groups, present weaknesses in administrative 

capacity make it questionable whether these workers will ever draw benefits, 

especially if they return to rural areas or move on to other urban areas. In some 

cases, the pension contribution is simply an added tax from which the migrant 

will derive no benefits.134 

In principle rural migrants and other contract workers who work in urban 

enterprises should have social insurance coverage. In fact, enforcement is weak. 

As rural migrants have few legal rights, they do not report this abuse. In addition, 

given their uncertain length of tenure in the area, they face a risk of not getting 

benefits due. These groups may prefer higher wages over a tenuous insurance 

contract.135 

There is increasing informal evidence that published urban earnings data exclude the pay 

of most migrant workers.136 The first section of this report137 referred to published 2002 

statistics on manufacturing employment in urban units, totaling 29.81 million, that 

included 4.59 million rural-to-urban migrants whose household registration was still in 

rural areas. Probably, their reported earnings were part of the published average earnings 

data for urban manufacturing staff and workers, but very likely, many millions more 

rural-to-city migrant manufacturing workers were not in the reported urban 

manufacturing employment or earnings data. There are many possible reasons for such 

exclusion, including the fact that many cities and municipalities in China do not consider 

rural-to-urban migrants to be real urban or municipal employees.138 It is not known 

42
whether these migrant manufacturing workers and their earnings get picked up in the 

TVE manufacturing data. 

It is reasonable to assume that TVE manufacturing employment and earnings data 

usually include the migrant manufacturing workers in towns and rural areas. The reason 

is that, because of the much lower ratio of social insurance costs in towns and rural areas, 

there is almost no incentive to leave these workers out of the data in those areas, in 

contrast to the situation in cities, where the higher ratio of social insurance costs affords a 

financial incentive to exclude migrant workers. There is no separate reporting of the 

earnings of migrant manufacturing workers either in the cities or outside urban areas. 

Manufacturing earnings over time 

One of the many goals of this research project for the US Bureau of Labor Statistics was 

to derive a time series of hourly manufacturing labor compensation for China for the 

period 1990-2002, if possible. If it is not possible to present such a series for all 

manufacturing employees in China, then a time series of real earnings or total 

compensation of some subgroup of manufacturing workers would still be useful. 

This article has shown that it is a major challenge just to estimate hourly 

manufacturing labor compensation for China in one recent year. The only reasons that 

this is even possible for the year 2002 are: 

a) For the year 2002, the Agriculture Ministry released for the first time figures on 

the total number of China TVE manufacturing workers and the total amount of 

earnings paid out to them during the year. 

b) The Labor Ministry carried out a large survey of city enterprises for the year 2002 

and published a book that included data on actual labor costs in urban 

manufacturing units above and beyond reported earnings (see Glossary and 

Definitions: China labor force market wage survey”). 

c) This author, after much searching, was fortunate to even locate the above volumes 

of information, but has not found such information for prior years. 

Because these data are not available for previous years, the creation of a defensible time 

series of manufacturing labor compensation in China for 1990-2002 is not possible until 

and unless such data are released, if they were even collected. 

Most of the data in this article relate to the year 2002 only. Although it would be 

revealing to analyze trends in manufacturing earnings over several years, the data 

required to construct such series over time are sparse. Published data on earnings trends 

for the manufacturing sector are available solely for urban manufacturing staff and 

workers. Table 10 presents published information on annual percent changes in average 

real earnings for this subset of city manufacturing employees. Real living standards have 

been rising in China’s cities, and real earnings have been rising for urban staff and 

workers in manufacturing.139 The “staff and worker” component of urban manufacturing 

workers is supposed to include manufacturing workers who migrated into cities from 

rural areas, but the rising wages indicated in table 10 probably exclude data on the 

earnings of most rural-to-urban migrant manufacturing workers.140 Reported urban 

43
manufacturing earnings rose rapidly in the early 1990s, slowly in the mid-1990s, and 

very rapidly at the end of the 1990s and on into the early 21st century. Tables 10 and 11 

and chart 5 show that these generalizations about city manufacturing earnings trends also 

hold for manufacturing employees in state-owned units, collective-owned units, and 

“other” ownership units (joint ventures, foreign-owned firms, multinational companies, 

and the like). 

Table 11 and chart 5 present trends in real annual earnings (not including required 

employer payments for social insurance plans or other nonwage labor costs) for urban 

manufacturing staff and workers in China. In 1990, the 53 million urban manufacturing 

staff and workers earned an average of 5,058 yuan (in constant 2002 yuan). As the 

number of urban manufacturing staff and workers shrank to 29 million in 2002, the 

earnings of those remaining averaged 11,001 yuan, more than double the 1990 average 

earnings. There was a shift in the composition of the “urban manufacturing staff and 

workers” category over that 13-year period.141 In 1990, the lowest-paid subgroup, urban 

collective manufacturing workers, was large (18 million) and held down average real 

earnings, while the highest-paid subgroup, private-sector enterprises, was minuscule. By 

2002, the highest-paid subgroup constituted more than half of urban manufacturing staff 

and workers. This trend toward the better paid private sector raised average earnings 

among urban staff and workers in manufacturing. 

Estimates of manufacturing employee compensation 

Many media and other sources around the world have published very rough estimates of 

hourly or monthly earnings or total compensation for manufacturing workers in China. A 

comparison of their estimates with those in this article is instructive. For example, one 

journal stated that manufacturing wages in China average about 60 cents an hour,142

 very 

close to the 57 cents estimated here for total compensation. One newspaper wrote, “A 

Chinese factory worker earns the equivalent of less than $1 per hour,”143 a statement 

supported by the preceding analysis, and one that holds true even for urban 

manufacturing workers, who are better paid than their counterparts outside the cities. 

Regarding particular manufacturing sectors, a newspaper article said that, in 

China, employees of auto-parts suppliers have average wage costs of 90 cents an hour.144

Another author said that employees of big global automakers in China “make the 

equivalent of $1.50 per hour in wages and benefits.”145 Table 7 indicates that China’s 

urban transportation equipment manufacturing workers had average 2002 earnings of 

14,409 yuan, which would translate into about 80 cents an hour for earnings alone and 

$1.23 per hour for total compensation. Therefore, the overseas reports of the 

compensation of auto workers in China are compatible with the data presented in this 

article. 

One journal wrote, “China is already by far the biggest garment exporter in the 

world, with average wages in the industry of 40 cents an hour.”146 That figure is close to 

the 41 cents an hour that the foregoing analysis has posited for the compensation of 

China’s TVE manufacturing employees. Garment workers outside the cities are paid less 

than that, because they are among the lower paid manufacturing employees in China. 

Table 7 indicated that urban garment workers average 9,066 yuan per year, or 

44
approximately 50 cents per hour, in earnings; their total compensation might be about 77 

cents an hour. If so, then the estimate of 40 cents per hour is too low for China’s urban 

garment workers, but correct for noncity employees in garment manufacturing. 

In general, global media-published estimates of manufacturing earnings or 

compensation in China are in the ballpark of reasonable estimates. 

Labor compensation costs and China’s competitiveness 

It is widely agreed that low earnings and low total labor compensation costs make 

manufacturing production in China competitive in the international market. One of the 

leading reasons that some of China’s own domestic manufacturing industries can sell 

their products at home and abroad, and that multinational and other foreign companies 

are moving their manufacturing operations to China, is the low cost of employing 

manufacturing workers there. Here is a sampling of statements to this effect from a 

variety of sources and perspectives: 

China’s emergence as one of the world’s leading export nations is driven by a 

huge disparity in the cost of producing goods, caused primarily by hourly wages 

that are a fraction of those in the United States and Western Europe. This is not 

news.147 

China’s textile industry: China has become the largest fiber production and export 

nation in the world...China’s garment and other industries are relatively 

competitive. The comprehensively large size of the industry and the low labor 

cost enable China to take a comparatively large international market share with 

low value-added production.148 

Juergen Peters, president of Germany’s IG Metall union and IMWF [International 

Metalworkers Federation] president, told a conference in Dearborn, Michigan, 

that the rapid development of the Chinese auto industry, coupled with the low 

wages paid to Chinese workers, make it inevitable that China will become a net 

exporter of vehicles.149 

The truly low cost of labor makes China particularly competitive in a number of 

manufacturing industries, including labor-intensive, assembly, and reprocessing 

industries; industries with low value added; those with simple repetitive steps in the 

manufacturing process; and food-processing industries. As one source puts it, “China has 

become an essential link in the global production chain for many labor-intensive 

products...a manufacturing hub for the rest of the world in low-end labor-intensive 

goods.”150 Labor productivity (output per employee) is low by world standards in these 

kinds of Chinese factories, and earnings are correspondingly low.151 In the 1990s and 

beyond, China’s employees experienced widening earnings inequality, as earnings rose 

for city-born workers, but basically stagnated for the least skilled and least educated 

workers.152 China is not particularly competitive in capital-intensive and materialsintensive industries. 

However, China is beginning to compete successfully in some kinds of 

moderately skills-intensive kinds of manufacturing. Large proportions of China’s young 

45
adults now have at least a lower middle school education and therefore are basically 

literate and numerate. Also, millions of young and middle-aged workers from rural areas 

are eager to get out of the countryside and therefore willing to work hard in a disciplined 

manner for pay that is low by international standards, but higher than they can earn in 

agriculture. China also has many millions of university-educated young adults who are 

especially competitive because they are good in engineering and technical fields, are 

hard-working and motivated, and work for a fraction of the salaries received by equally 

capable young adults in developed countries. China now produces at least half of the 

world’s cameras and photocopiers and one-quarter of the world’s television sets and 

washing machines.153 Indeed, China “is the new workshop of the world, producing twothirds of all photocopiers, microwave ovens, DVD players, and shoes, over half of all 

digital cameras, and around two-fifths of personal computers.”154 

Labor compensation in China’s manufacturing sector is higher than it was a 

decade or two ago. This means that some other developing countries are now able to 

compete with China purely on the basis of earnings per manufacturing worker. Real 

living standards have been rising in China’s cities, and real earnings have been rising for 

urban staff and workers in manufacturing, as shown in tables 10 and 11 and chart 5.155 

Why are urban manufacturing earnings rising rapidly in China? Some scholars 

argue that because labor productivity is rising rapidly in China’s city factories, we would 

expect city manufacturing earnings also to rise.156 Among the forces driving the increase 

in urban manufacturing earnings are a sustained rise in the returns to education and skill, 

as well as a wage premium for Communist Party members and others remaining in 

protected state-owned enterprises.157 Rigidities in urban labor markets also have forced 

earnings upward and impeded competition.158 Other experts contend that the huge supply 

of surplus urban and rural workers ought to keep their earnings down: “The coincidence 

of rising mass unemployment and rapid increases in real wages in the late 1990s appears 

contrary to the predictions of competitive labor markets.”159 The range of earnings in 

Chinese manufacturing has indeed widened, and the least educated unskilled workers 

have experienced near-stagnation in their real earnings “under the twin pressures of 

heavy migration from China’s villages and [the] intense pursuit of cost advantage from 

overseas buyers of labor-intensive goods.”160

In addition to the earnings bill, required payments for other urban employee 

benefits have increased.161 China is trying to build a viable system of pensions, medical 

benefits, unemployment benefits, workers’ compensation, and housing benefits, at least 

for its city population, as discussed previously. One source argues that required employer 

payments for these urban social safety net programs in China are now higher than they 

need to be--for example, substantially higher than in Malaysia, South Korea, Taiwan, and 

Singapore.162 In some cities, the mandated payments are still rising rapidly. For example, 

Average labor costs in Shanghai rose by 15% last year due to increases in welfare 

payments, healthcare subsidies, and housing subsidies. On average local 

companies paid 10,849 yuan in fixed and optional welfare fees, up 22.4% [from 

the year before]. This rise was significantly higher than in cities such as Kunshan, 

Nanjing, Hangzhou, Suzhou, or Ningbo.163

46
As earnings and mandated social insurance payments increase, urban China 

becomes less competitive in the global context and even in the domestic Chinese context. 

Shanghai, for example, is beginning to become too expensive for many manufacturing 

concerns: “The massive influx of investment and rapidly improving standard of living has 

driven up labor costs in Shanghai, almost high enough to price Shanghai out of the 

market.”164 Many businesses are now locating elsewhere. “Companies moving from 

Shanghai to neighboring Anhui Province report that they can cut costs by 50%. Few 

multinationals can resist those kinds of savings.”165 Cities throughout China are much 

more expensive for manufacturing than even their nearby suburbs: “Henry Tan, chief 

executive of Luen Thai, Hong Kong’s largest garment business with 20,000 employees, 

says he can save a third in power costs and half in wage bills just by relocating a factory 

half an hour’s drive from Guangzhou, the capital of Guangdong.”166 Indeed, many 

manufacturing companies are now choosing to move their production operations from 

developed countries or from China to other developing countries with lower labor costs. 

For instance, India, Pakistan, and Vietnam are becoming competitive as textile and 

apparel producing and exporting countries because the cost of textile production is 

generally lower there than in China.167 Of course, China remains highly competitive 

globally because of its relatively low labor costs and many other favorable factors, but 

rising labor compensation in China has begun to erode the country’s manufacturing price 

advantage. 

Some businesses are moving from the city to the poorer inland province of 

Anhui.168 Cities throughout China are much more expensive for manufacturing than even 

their nearby suburbs. Factories can save a third in power costs and half in wage bills just 

by relocating a factory half an hour’s drive outside of Guangdong’s capital city of 

Guangzhou.169 

Additional sources of China’s competitiveness in manufacturing 

The leading reason that China is so competitive in manufacturing for the international 

market as well as its own domestic market is the low cost of labor in China. But China 

has other competitive advantages over most other countries as well, among them the 

following: 

China’s Domestic Market 

Of the world’s total population, 21 percent live in China. They provide a far larger 

domestic market for manufactures than any other developing country today with the 

possible exception of India.170 Though China is still a lower middle income country, 

ordinary people buy some manufactured goods, providing a ready market for the least 

expensive manufactured products. More important, China has a growing middle class and 

a small luxury class, especially in cities. The numbers of such consumers are variously 

estimated as follows: 

47
And Mr. Xie [Andy Xie, Chief Economist for Asia-Pacific at Morgan Stanley 

Dean Witter] estimates that in China today, about 50 million people can be 

generally considered middle class or on the way there very soon.171 

China’s emerging middle class, people with net income of at least $3,000 a year, 

numbers nearly 100 million and is growing about 20 percent yearly.172 

...China’s swelling middle class (the 120 million who now have disposable 

income of up to $8,000 per year, a group that could, according to Morgan Stanley, 

grow to nearly half a billion by 2010)... 173

Consumers of luxury products now account for 13% of the total population in 

China and are continuing to increase.174

China now has high penetration rates for a wide range of consumer goods—that 

is, today many more Chinese consumers buy many more goods. There are color 

television sets in almost every urban home, refrigerators and washing machines in 

more than four out of five, videodisc players and air conditioners in half of them, 

microwave ovens in almost a third, and computers in one out of five...Close to 90 

percent of urban Chinese now own a home.175 

Because of its huge consumer base, China is already the world’s biggest market for 

television sets, refrigerators, and mobile phones, and China ranks third after the U.S. and 

Japan in sales of personal computers.176 No matter how China’s luxury class or middle 

class consumer base is defined or calculated, it is clear that the growing domestic market 

is a factor drawing manufacturers to China. Indeed, multinational corporations from the 

most developed countries and economic blocs—-the U.S., Western Europe, and Japan—-

aim their foreign direct investment (FDI) into China primarily at capital-intensive, 

technology-intensive, and skill-intensive products and services aimed at China’s domestic 

market, in contrast to the FDI from Hong Kong, Taiwan, Singapore, and South Korea 

into China, which is concentrated on labor-intensive, relatively low-technology 

manufactured goods to be exported to the international developed country market.177 

Convenient logistics in coastal regions of China

In certain coastal regions of China, especially the Pearl River Delta region of Guangdong 

Province near Hong Kong and Macao, the Yangtze River Delta region including 

Shanghai and Zhejiang and southern Jiangsu Provinces, the Fujian Province coastal areas 

across from Taiwan, the Beijing-Tianjin region, and other coastal cities including 

Qingdao and Dalian, the local infrastructure supports comparatively low-cost and 

efficient manufacturing production. Huge networks of component suppliers have 

concentrated in these places, providing manufacturers with many choices for basic parts 

and with the ability to pit vendors against one another.178 “The critical mass of factories, 

subcontractors, and specialized vendors has created a manufacturing environment with 

which few can compete.”179 Transportation and telecommunications networks are 

adequate in these areas. Improving infrastructure has been an important factor bringing 

48
FDI to China’s coastal regions.180 Also in the booming coastal cities, there are large 

numbers of educated and bilingual or multilingual local Chinese to staff the professional 

and managerial layers of manufacturing concerns, and they are willing to work for 

moderate salaries. 

Low Price of Land 

Many domestic manufacturing concerns in China never had to buy the land for their 

factories. Land was simply allocated to state-owned or collective-owned enterprises 

during the Maoist command economy period before 1978. During the economic reform 

period, many such factories still inhabit the free land. If they form a joint venture or are 

bought out by a foreign company, the assigned or negotiated value of that land is part of 

what they bring to the deal, but first the land must be converted from “allocated” to 

“granted” for a large fee. Today, the value of land in urban or rural China is only partly 

market driven; much of whatever price emerges is still arbitrary and command economy 

driven: “There is still little transparency in transfers of land-use rights in China, with 

most transactions set in bilateral agreements between buyers and sellers.”181 Current land 

values in different urban areas of China vary enormously. Property prices have risen 

dramatically in Shanghai, sparking fears of a “bubble” and the possible future collapse of 

real estate and land prices.182 The cities with the most expensive land in the PRC today 

are, in order from the most expensive: Beijing, Shanghai, Hangzhou (capital of Zhejiang 

Province), Nanjing (capital of Jiangsu Province), Chengdu, Tianjin, Guangzhou (capital 

of Guangdong Province), Chongqing, and Shenzhen which is in the Pearl River Delta of 

Guangdong. Land prices in the Yangtze River Delta have now surpassed those in the 

Pearl River Delta.183 However, one economist reported that in China: “Land prices have 

declined by about 70% in major urban areas since 1993.”184 

Incentive policies to promote foreign investment in China 

During the 1980s and 1990s, China gave special financial incentives, land use benefits, 

foreign currency exchange preferences, tax holidays, and other tax incentives to foreign 

companies willing to invest and set up factories in its coastal regions, primarily 4 (now 5) 

special economic zones (SEZs) and 14 opened cities located in Guangdong, Shanghai, 

Jiangsu, Fujian, and other coastal provinces; therefore foreign direct investment (FDI) 

poured into China in general and into these Chinese coastal areas in particular.185 In 

addition, China’s regulatory climate has improved in some ways that promote 

entrepreneurship, new businesses, and flexibility of hiring workers. The cost of starting a 

business in China is higher and the time required to do so is longer than in developed 

countries, but these measures are more favorable in China than the East Asia/Pacific 

average; and in order to promote the hiring of more workers, China has slashed 

regulatory burdens associated with hiring.186 Chinese policies in the 1990s and today 

encourage foreign direct investment, particularly in manufacturing, with the result that a 

little over half of FDI has been in the manufacturing sector: 

Not only does China place few restrictions on foreign ownership of 

manufacturing firms, through its tariff and other policies it allows foreign firms 

49
that produce for the export market to operate at international prices. Machinery 

and equipment that goes into foreign joint ventures and wholly foreign-owned 

firms is entirely exempt from import duties. And the foreign-sourced parts and 

components that are assembled into finished goods are also exempt from all 

import duties when they are re-exported in the form of finished goods. Moreover, 

manufacturers are eligible for a rebate of almost all domestic value-added taxes 

they have paid for any content in their exported goods that is sourced from within 

China.187 

 

Relatively stable political situation 

If a company located in an economy with high labor costs wishes to move its 

manufacturing operations to a lower-cost environment, why would it choose China? 

Many other poor countries have extremely low costs of labor as well. But many 

developing or poor countries are not attractive because they have unstable political, 

economic, and financial situations. China is not a perfect manufacturing environment by 

any means, but there is relatively low terrorist risk, civil unrest does not destabilize the 

economy, there are few public safety concerns for multinationals’ property and 

personnel, and the economy and financial system are functioning—-not supremely well 

but at least adequately. Multinational firms are thought to allocate their investment 

among countries so as to maximize their risk-adjusted profit.188 China compares rather 

well with other less developed countries when both risk and costs of production are 

considered. 

 

What hampers China’s competitiveness in manufacturing? 

From an international perspective, China is very competitive in producing most 

manufactured products. However, certain aspects of conditions in China deter some 

companies from moving their manufacturing to China or induce companies to put their 

production operations elsewhere instead. One reason is that labor costs are rising in 

China, especially in the cities, as discussed earlier, leaving some other developing 

countries with lower manufacturing labor compensation than China today. Some other 

such considerations are as follows: 

 China is easy to enter but very difficult to leave 

China’s policies attract foreign companies to enter and invest there, but sometimes make 

it hard to succeed in China and even harder to back out again. China’s legal system is 

very slow and ineffective at enforcing legal contracts; it is also subject to corruption and 

arbitrary rulings. China has been found wanting with regard to creditor rights and credit 

information; China has no private credit bureaus and the existing public credit registry 

covers only about 3 potential borrowers per 1,000. Therefore, entrepreneurs, first-time 

borrowers, and repeat borrowers with good credit history cannot prove their creditworthiness and borrow for business development. Bankruptcy proceedings are slow. 

China has the least flexibility in the Asia/Pacific region with regard to firing workers; 

therefore, laying off redundant workers and streamlining operations is still difficult.189

50
Finally, China mandates that foreign companies bring in large amounts of convertible 

currency when setting up there, but severely restricts taking profits out of China. 

 

 Electric power shortages 

China’s economy has been booming for so long that power shortages have become a 

problem. In 2004, electric power outages, blackouts, shortfalls, and rationing hit 

manufacturers in the Pearl River Delta and Shanghai. Power was cut 1-3 days a week in 

many factories in Guangdong. “Demand nationwide is exceeding capacity for a third 

year, causing shortages in at least 24 of 31 provinces, the State Electricity Council said. It 

has been fueled by industrial output that surged 17 per cent nationwide last year and 22 

per cent in Guangdong.”190

Raw material shortages 

China’s rapidly growing and possibly overheated economy is causing domestic and, in 

some cases, global shortages of certain raw materials and construction materials needed 

for manufacturing production or expansion. For example, China’s sharp increase in 

exports of textiles and clothing in 2004 drove up domestic prices of cotton and other 

fibers.191 

Lack of patent, trademark, and copyright protection

China has serious deficiencies in enforcing the protection of intellectual property.192

Patents and copyright, both domestic and foreign, are ignored with impunity in China’s 

manufacturing sector.193 Trademark/brand theft is epidemic and very expensive and slow 

to attempt to correct.194 Production processes, brand names, and innovations are stolen by 

domestic Chinese producers and churned out at a cheap price for the home and global 

markets. China’s government has made occasional attempts to stop this intellectual piracy 

under intense international pressure, but only with temporary success: “China’s thriving 

industry in product piracy routinely violates copyrights, trademarks and patents on 

movies, designer clothes and other goods, despite promises by Beijing to crack down.”195

Many multinational companies have entered joint ventures with Chinese partners, often 

because Chinese government controls prevent them from entering China any other way, 

only to discover that the “partner” has stolen all the foreign company’s proprietary 

information and set up a competing production center illegally producing the product 

patented by the multinational. Globally, based on Security Management’s Intellectual 

Property Security Survey conducted in April 1998, Chinese entities carried out 41 percent 

of the theft of American-owned technology; China treats such technology piracy as 

merely a minor civil or administrative matter rather than the crime that it is.196 Because 

of this problem of systematic theft of intellectual property in China, many foreign 

companies avoid entering China and choose to continue producing in developed countries 

or move to countries that protect intellectual property. 

51
Conclusions 

This report has collected and assessed the available statistics on manufacturing labor 

compensation in China. Because non-city earnings data became available for the first 

time for the year 2002, it finally became possible to estimate all-China manufacturing 

labor compensation. The Ministry of Agriculture is responsible for supervising and 

collecting statistics on all the industrial enterprises located outside city limits in China. 

For the year 2002, one of their publications, the China Village and Town Enterprise 

Yearbook 2003, published, for the first time, two relevant numbers for the purposes of 

this report, the total number of TVE manufacturing employees in China for 2002, and the 

total earnings costs for 2002 for all those employees. 

 This report has combined employment and earnings data for China’s urban 

manufacturing workers and for the noncity TVE manufacturing workers in order to derive 

approximations of annual, monthly, and hourly labor compensation for urban, noncity, 

and all-China manufacturing employees. Reported earnings and labor compensation data 

have been adjusted separately to yield urban data and TVE data. As of 2002, the latest 

year for which adequate earnings data are available, average labor compensation for 30 

million of China’s city manufacturing employees was approximately U.S.$0.95 per hour, 

while the reported 71 million manufacturing employees in TVE’s outside the cities 

averaged about U.S.$0.41 in labor compensation per hour of work. Combining the labor 

compensation of manufacturing workers in cities and in TVE’s to derive an all-China 

estimate results in an average labor compensation of approximately U.S.$0.57 per hour of 

work for 101 million manufacturing workers in China. 

 Because living costs are so low in China, this report also calculates the estimated 

take-home pay of manufacturing employees in international purchasing power parity 

dollars. China’s manufacturing workers in 2002 got cash income that would be similar to 

U.S. employees receiving take-home pay of just over U.S.$2 per hour in terms of what 

the money would purchase. China’s TVE manufacturing employees got cash income 

equivalent to less than U.S.$2 purchasing power and urban manufacturing employees 

received the equivalent take-home pay of almost U.S.$3 in terms of what they could buy. 

The following items should have high priority for future data collection in China 

and future research on hourly labor compensation in China’s manufacturing sector: 

1. Data on hours worked. For the important goal of calculating average hourly labor 

compensation in manufacturing in China, a high priority is to get better data on 

actual hours worked by employees in the manufacturing sector. China’s 

government could itself gather and publish more systematic data on this important 

measure, and scholars should also emphasize gathering information on it. 

2. National economic census. During the year 2005, with reference year 2004, China 

conducted its first national census of the economy. This undertaking is expected 

to refine, correct, and update data on labor compensation received in 

manufacturing. When results of the economic census become available starting in 

late 2005, the new information should be used to update the estimates in this 

article. 

52
3. Noncity manufacturing labor compensation. Much more data collection and 

analytical research are needed to fill in some of the missing information on rural 

and town manufacturing earnings and total compensation. 

4. Labor force surveys. China needs to design, carry out, and publish results of labor 

force surveys using international standards and definitions. Such surveys should 

cover the whole country and should collect and publish data on earnings and total 

compensation. China reportedly will begin a regular labor force survey in 2006, 

the results of which will subsequently be published. 

Endnotes 

 1

 See Jeffrey R. Taylor and Judith Banister, Statistical Reliability in China (U.S. 

Census Bureau, 1989). 

2

 Carsten A. Holz, The Institutional Arrangements for the Production of 

Statistics, Statistics Directorate, OECD-China Governance Project. OECD Statistics 

Working Paper STD/DOC(2005), 1 (Paris, Organization for Economic Cooperation and 

Development, 2005), p. 5. 

3

 See “Ministries” in the “Glossary and Definitions” section of the Appendix for 

a list of the ministries involved in the collection and reporting of manufacturing 

employment in China. 

4

 For relevant Chinese language terms, see “actual situation,” “labor situation,” 

and “yearend number of workers” which are defined in the “Glossary and Definitions” 

section of the Appendix. 

5

 Copies of the enterprise statistical reporting form (laodong qingkuang biao, or 

“labor situation form”) for 2004 were submitted to urban authorities by the end of 

February 2004 and reported 2003 data for urban companies and work units; wagereporting instructions (laodong gongzi--tongji taizhang, or “labor wages--statistical 

accounts”) for 2004 were from the Beijing Municipality Statistical Bureau. (See 

especially p. 2-1 of the latter.) 

6

 The TVE’s were originally established as collective economic units run by local 

governments in rural areas and towns. The purpose of TVE’s was, and still is, to employ 

small farmers and rural laborers in industrial or service occupations in locations not far 

from their family homes. This practice allows the modernization of China’s vast 

countryside without necessitating massive migration from villages to cities. In the 1980s, 

and especially from the 1990s to today, TVE’s shifted from public toward private 

ownership, and many foreign-funded enterprises became classified as TVE’s. Now the 

TVE category, in addition to encompassing small local enterprises, can include very large 

factories in industrial parks outside cities, as well as suburban, town, and rural factories. 

Indeed, companies have incentives to have their factories classified as TVE’s because 

mandatory social insurance payments are very low, statistical reporting requirements are 

53
 

minimal, and many legal and taxation benefits accrue to TVE’s. See Glossary and 

Definitions, “TVE’s,” in the Appendix. 

7

 See the “Glossary and Definitions” section of this report for the Chinese 

characters and definitions of these terms. 

8

 China National Bureau of Statistics and China Ministry of Labor, compilers,

China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), p. 638. 

9

 See also China Labor Statistical Yearbook 2003, pp. 13, 230. 

10 Ibid., p. 249. 

11 Enterprise statistical reporting forms, 2004; wage-reporting instructions, 2004. 

12 China Labor Statistical Yearbook 2003, p. 169. 

13 China State Administration for Industry and Commerce, Zhongguo gongshang 

xingzheng guanli nianjian 2003 [Yearbook of the Industry and Commerce Administration 

of China 2003] (Beijing, China Industry and Commerce Press, 2003), pp. 583, 587. 

14 See also Ming Lu, Jianyoung Fan, Shejian Liu, and Yan Yan, “Employment 

restructuring during China’s economic transition,” Monthly Labor Review, Aug. 2002, 

pp. 25-31; on the Internet at http://www.bls.gov/opub/mlr/2002/08/art3full.pdf. 

15 China Labor Statistical Yearbook 2003, p. 10. 

16 Ibid., p. 20. 

17 Ibid., p. 243. The terms “laid-off staff and workers,” “not-on-post staff and 

workers,” “off-post staff and workers,” and “on-post staff and workers” are defined in 

the “Glossary and Definitions” section of the Appendix. 

18 Ray Brooks and Ran Tao, “China’s labor market performance and challenges,” 

IMF Working Paper WP/03/210 (Beijing, International Monetary Fund, Nov. 2003); on the 

Internet at http://www.imf.org/external/pubs/ft/wp/2003/wp03210.pdf; see also Robert H. 

McGuckin and Matthew Spiegelman, China’s Experience with Productivity and Jobs

(New York, The Conference Board, 2004), p. 12. 

19 The term “unemployment rate” is defined in the “Glossary and Definitions” 

section of the Appendix. 

20 China Labor Statistical Yearbook 2003, pp. 96, 126. 

21 Ibid., p. 637. 

54
 22 Thomas G. Rawski, Recent Developments in China’s Labor Economy (Geneva, 

International Labor Office, Nov. 2003), revised from a report prepared in January 2002. 

23 McGuckin and Spiegelman, China’s Experience, p. 5. 

24 See Changming Li, China Industrial Development Report 1997 (Beijing, 

Economic Management Press, 1997), especially Chapter 11, “China’s textile industry: 

From size to strength”; also in Christopher Howe, Y. Y. Kueh, and Robert Ash (eds.), 

China’s Economic Reform: A Study with Documents (London, RoutledgeCurzon, 2003), 

pp. 165-75. 

25 McGuckin and Spiegelman, China’s Experience, pp. 4-5, 11-13, 17. 

26 The calculation procedure for estimating the nationwide employed population 

from the long-form sample sidesteps the problem that there was a severe undercount of 

children below age 10 or so in the 2000 census. The count of the population aged 15 

years and older in the 2000 census was quite complete, in that it matched the expected 

adult population as projected from the 1990 census and taking into account all available 

demographic information for the interim period, even though there is controversy about 

whether some young and middle-aged adults were counted in the wrong places. (See 

Weimin Zhang and Hongyan Cui, “Dui Zhongguo 2000 nian renkou pucha zhunque xing 

de guji” [“Estimates of the accuracy of China’s 2000 population census”], Renkou yanjiu 

(Population Research), vol. 27, no. 4, 2003, pp. 25-35; Kam Wing Chan, “Chinese 

census 2000: New opportunities and challenges,” The China Review, Fall 2003, pp. 1-12; 

Daniel Goodkind and Gregory Robinson, “Intercensal evaluations of year 2000 censuses: 

Issues and surprises in the United States and China,” paper presented at the International 

Seminar on China’s 2000 Population and Housing Census, Beijing, April 2004.) 

27 Alwyn Young, Gold into Base Metals: Productivity Growth in the People’s 

Republic of China during the Reform Period, NBER Working Paper Series no. 7856 

(Cambridge, MA, National Bureau of Economic Research, 2000), pp. 22-23. 

28 China Labor Statistical Yearbook 2003, pp. 8-9. 

29 China National Bureau of Statistics, Tabulation on the 2000 Population Census 

of the People’s Republic of China, vol. 2 [in Chinese] (Beijing, China Statistics Press, 

2002), pp. 1578-79. 

30 China Labor Statistical Yearbook 2003, pp. 23, 362. 

31 Wage reporting instructions, 2004, p. 1-2. 

32 Compare “Di wu ci quanguo renkou pucha biao chang biao” (“The fifth 

national population census form, long form) (Beijing, China National Bureau of 

55
 

Statistics, 2000), columns R17-R22, with China National Bureau of Statistics, China 

Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), p. 181. 

33 China National Bureau of Statistics, Tabulation on the 2000 Population Census 

of the People’s Republic of China, vol. 1, p. 570; vol. 2, pp. 800, 1269. 

34 The terms “urban” and “rural” are defined in the “Glossary and Definitions” 

section of the Appendix. 

35 Tabulation on the 2000 Population Census of the People’s Republic of China, 

vol. 2, pp. 888, 942, 996, 1050. 

36 Louise Fox and Yaohui Zhao, “China’s labor market reform: Performance and 

prospects,” background paper for the China 2002 Country Economic Memorandum

(Washington, DC, World Bank, 2002), p. 27. 

37 Most of the information that follows is from an interview with NBS statistics 

officials in Beijing Jan. 10, 2005. 

38 Holz, The Institutional Arrangements, p. 12. 

39 Holz, The Institutional Arrangements, p. 17. 

40 China Statistical Yearbook 2003, p. 181. 

41 Enterprise statistical reporting forms, 2004; wage-reporting instructions, 2004, 

pp. 1-1 to 1-2. 

42 China Statistical Yearbook 2003, p. 123; Loraine A. West, discussant, BLS

seminar, Washington, DC, Nov. 8, 2004. 

43 “2004 nian chengzhen laodongli diaocha zhidu” [“The 2004 Urban Labor 

Force Survey System”] (China National Bureau of Statistics, Nov. 17, 2004), p. 20. 

44 China Statistical Yearbook 2003, pp. 146-47. 

45 China Labor Statistical Yearbook 2003, p. 8. 

46 Young also showed that the official NBS and Labor Ministry compilation of 

national manufacturing employment in 1995 was highly inconsistent with the 1995 

industrial census results. (See Young, Gold into Base Metals, 2000, p. 22 and table XI.) 

47 Holz, The Institutional Arrangements, pp. 15-16. 

48 Young, Gold into Base Metals, 2000, pp. 22-23. 

56
 49 Daniel Goodkind, personal communication, Nov. 8, 2004. 

50 Tabulation on the 2000 Population Census, vol. 2, p. 1569. Figures on the 

occupational breakdown of China’s manufacturing employees are based on census long 

form data from a 10% sample of households, extrapolated by this author to the total 

civilian population of China at ages 15 and older. 

 

51 Nicholas R. Lardy, “United States-China ties: Reassessing the economic 

relationship,” testimony presented before the House Committee on International 

Relations, U.S. House of Representatives, Oct. 21, 2003; on the Internet at 

http://www.iie.com/publications/papers/lardy1003.htm. 

52 Zhong Wu, “Guangdong keeps foreign trade lead,” The Standard, Greater 

China’s Business Newspaper, May 18, 2004. 

53 China Labor Statistical Yearbook 2003, p. 8. 

54 Ibid., p. 26. 

55 Ministry of Agriculture, China TVE Yearbook Editorial Committee, ed., China 

Village and Town Enterprise Yearbook 2003 [in Chinese] (Beijing, China Agriculture 

Publishing House, 2003), pp. 156, 174. 

56 Wage-reporting instructions, 2004; enterprise statistical reporting forms, 2004. 

57 Personal communication NBS officials, Jan. 10, 2005; table 1, this report; China 

National Bureau of Statistics and China Ministry of Labor, compilers, China Labor 

Statistical Yearbook 2004 (Beijing, China Statistics Press, 2004), p. 9. 

58 Fox and Zhao, “China’s labor market reform,” pp. 13-14. 

59 “Chengzhen jiuye yu shiye wenti yanjiu--2000 nian di wu ci quanguo renkou 

pucha shuju fenxi” [“Research on Urban Employment and Unemployment Problems--

Analysis of Year 2000 5th National Census Data”] (Beijing, Chinese Academy of Social 

Sciences, CASS Population and Labor Economics Research Institute, 2003), p. 47. 

60 “Shanghai Shi 2003 nian wailai liudong renkou diaocha—shuju shouce” 

[“Survey of the Floating Population of Shanghai in 2003--Data Handbook”] (Shanghai, 

Shanghai Municipal Statistics Bureau, 2004). 

61 Shanghai tongji nianjian 2003 [Shanghai Statistical Yearbook 2003] (Beijing, 

Shanghai Municipal Statistics Bureau, China Statistics Press, 2003), p. 62; Shanghai 

Statistical Yearbook 2004 database; China Statistical Yearbook 2003, p. 98. 

57
 62 China Labor Statistical Yearbook 2003, p. 8; Shanghai Statistical Yearbook 

2003, pp. 78-81; Shanghai Statistical Yearbook 2004 database. 

63 Bill Powell, “China’s great step forward,” Fortune Magazine, vol. 144, issue 5, 

Sept. 17, 2001, pp. 128-142. 

 

64 Rawski, Recent Developments in China’s Labor Economy, p. 1. 

65 Matt Forney, “Tug-of war over trade: As China becomes the world’s factory, 

U.S. and European manufacturers are hurting,” Time International (Europe Edition), Feb. 

23, 2004, p. 34. 

 

66 Hu Angang. Jiuye yu fazhan: Zhongguo shiye wenti yu jiuye zhanlue 

[Employment and Development: China’s Unemployment Problem and Employment 

Strategy]. (Shenyang, Liaoning People’s Press, 1998); Rawski, Recent Developments in 

China’s Labor Economy; Fang Cai, “The consistency of China statistics on employment: 

Stylized facts and implications to public policies,” presented at the International Research 

Conference on Poverty, Inequality, Labour Market and Welfare Reform in China, 

Australian National University, Canberra, Aug. 2004. 

http://econrsss.anu.edu.au/chinaconfabstracts.htm

John Knight & Jinjun Xue, “How high is urban unemployment in China?” presented at 

the International Research Conference on Poverty, Inequality, Labor Market and Welfare 

Reform in China, Australian National University, Canberra, Aug. 2004. 

http://econrsss.anu.edu.au/chinaconfabstracts.htm

John Knight and Linda Yueh, “Urban insiders versus rural outsiders: Complementarity or 

Competition in China’s urban labour market?” presented at the International Research 

Conference on Poverty, Inequality, Labor Market and Welfare Reform in China, 

Australian National University, Canberra, Aug. 2004. 

http://econrsss.anu.edu.au/chinaconfabstracts.htm

“China, no right to work,” Economist, Sept. 11, 2004, pp. 27-28. 

67 Fang Cai, Yaowu Wu, John Giles, and Albert Park. “Jingji chongzu ruhe 

yingxiang chengshi zhigong de jiuye he fuli” [“How economic restructuring has affected 

the employment and welfare of city staff and workers”], Zhongguo laodong jingjixue 

[China Labor Economics], 2004, vol. 1, no. 1, July, pp. 1-32. 

68 Aimin Chen and Edward N. Coulson, “Determinants of urban migration: 

Evidence from Chinese cities,” Urban Studies, vol. 39, no. 12, Nov. 2002, pp. 2189-

2197. 

69 Jianchun Yang, “2002 nian zhongguo jiuye qingkuang” [“China 2002 

employment situation”], Zhongguo renkou tongji nianjian 2003 [China Population 

Statistics Yearbook 2003]. Beijing: China Statistics Press, 2003, p. 265; Fang Cai and 

Meiyan Wang, “Zhongguo chengzhen laodong canyulu de bianhua ji qi zhengce hanyi”

58
 

[“Changing labor force participation rate in urban China and its implications”], Zhongguo 

shehui kexue [Social Sciences in China], 2004, issue 4, July, 

pp. 68-79, 207, esp. p. 79. 

 

70 “China, no right to work,” Economist, p. 28. 

 

71 David Hale and Lyric Hughes Hale, “China takes off,” Foreign Affairs, vol. 82, 

no. 6, Nov./Dec. 2003, pp. 36-53. 

 

72 Cai et al., 2002, p. 321; Knight and Xue, “How high is urban unemployment in 

China?” p. 2. 

 

73 McGuckin and Spiegelman, China’s Experience, p. 27. 

74 “The halo effect: How China’s expansion will affect growth and jobs 

elsewhere,” Economist, Sept. 30, 2004. 

 

75 Binglan Xu, “‘Unique’ China defies world’s predictions,” China Daily, June 

21, 2004, p. 11. 

76 John Knight, Lina Song, and Huaibin Jia, “Chinese rural migrants in urban 

enterprises: Three perspectives,” Journal of Development Studies, vol. 35, no. 3, Feb. 

1999, pp. 73-104; Zhong Zhao, “Migration, labor market flexibility, and wage 

determination in China: A review,” China Center for Economic Research, Peking 

University, 2004. 

77 “Amazingly, China has labour shortages,” Economist, Oct. 7, 2004. 

 

78 Fox and Zhao, “China’s labor market reform,” pp. 1-5, 25, 30-38. 

79 “China, no right to work,” Economist, p. 28. 

 

80 Mei Fong, “A Chinese puzzle: Surprising shortage of workers forces factories 

to add perks,” Wall Street Journal, Aug. 16, 2004, p. B1. 

81 Ibid.; Peter S. Goodman, “In China’s cities, a turn from factories,” Washington 

Post, Sept. 25, 2004. 

 

82 “China tackles labor problems with new laws,” Washington Times, Nov. 16, 

2004. 

83 “String of pearls: China’s development,” Economist, Nov. 20, 2004, pp. 43-44. 

84 Brooks and Tao, “China’s labor market,” pp. 1-3. 

 

59
 85 Knight and Xue, “How high is urban unemployment in China?”, p. 18; Knight 

and Yueh, “Urban insiders versus rural outsiders.” 

 

86 Forney, “Tug-of war over trade,” p. 34. 

 

87 Ben Dolven, “Take our workers, please,” Far Eastern Economic Review (Hong 

Kong), Feb. 27, 2003, pp. 24-26. 

88 For manufacturing productivity trends in the advanced industrial countries, see 

International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 

Revised Data for 2003 (Bureau of Labor Statistics, Feb. 25, 2005), on the Internet at 

http://www.bls.gov/news.release/pdf/prod4.pdf; and International Comparisons of 

Manufacturing Productivity and Unit Labor Cost Trends, Supplementary Tables (Bureau 

of Labor Statistics, Feb. 25, 2005), on the Internet at 

http://www.bls.gov/fls/prodsupptabletoc.htm. 

89 Comparative Civilian Labor Force Statistics, Ten Countries, 1960-2004 

(Bureau of Labor Statistics, May 13, 2005), Table 6; on the Internet at 

http://www.bls.gov/fls/flslforc.pdf. 

90 Fang Cai, Albert Park, and Yaohui Zhao, “The Chinese labor market,” paper 

presented at the Conference on China’s Economic Transition: Origins, Mechanisms, and 

Consequences, Pittsburgh, Pennsylvania, Nov. 2004, p. 17. 

91 China Village and Town Enterprise Yearbook 2003; data were for 2002. 

92 “China, no right to work,” Economist, pp. 27-28. 

93 Most of the foregoing section of this report was published separately as 

“Manufacturing employment in China,” in the July 2005 Monthly Labor Review (pp. 11-

29), on the Internet at http://www.bls.gov/fls/#publications. 

94 As discussed in the foregoing section of this report, China’s official statistics 

reported 83 million manufacturing employees at yearend 2002, but a variety of other 

available statistics strongly indicated that the actual number was more than 100 million. 

95 China’s official statistics reported 38 million city manufacturing employees as 

of yearend 2002. Data on earnings are not available for 8.2 million manufacturing 

workers in the cities; of these workers, 2.6 million are self-employed. The Bureau of 

Labor Statistics does not include the self-employed in its comparative estimates of hourly 

compensation costs, which relate to paid production workers only. China’s data cover 

both production workers and nonproduction employees. 

96 See note 6 above for historical and current information about TVE’s in China. 

60
 97 International Comparisons of Hourly Compensation Costs for Production 

Workers in Manufacturing (Bureau of Labor Statistics), on the Internet at 

http://www.bls.gov/news.release/ichcc.toc.htm. 

98 See the first section of this report on “Manufacturing employment in China” 

for further background information about China’s statistical system. 

99 Examples are available of statistical reporting forms and instructions issued to 

city enterprises to use to report employment and earnings data for the calendar year 2003. 

A “labor situation form” [Laodong qingkuang biao] was to be submitted to authorities by 

the end of February 2004. Wage-reporting instructions were in the publication Laodong 

gongzi; tongji taizhang [Labor wages; statistical accounts] (Beijing, Beijing 

Municipality Statistical Bureau, 2004), especially p. 2-1. 

100 China Statistical Yearbook 2003, pp. 66, 84, 87, 90. 

101 China Labor Statistical Yearbook, published annually; China Village and 

Town Enterprise Yearbook 2003, pp. 130-31. 

102 China Labor Statistical Yearbook 2003, pp. 630, 638. 

103 Chinese sources did not report earnings data for another 8 million urban 

manufacturing employees: self-employed individual manufacturing workers and the 

investors and workers in relatively small private manufacturing concerns. It is not known 

whether this group of city manufacturing employees earns more or less than the 

“manufacturing employees in urban units.” However, some of the employers of these 8 

million workers pay lower social insurance payments or none at all to city governments. 

104 China Village and Town Enterprise Yearbook 2003, pp. 130-31. 

105 Wage-reporting instructions, 2004, p. 2-4. 

106 See BLS Handbook of Methods (Bureau of Labor Statistics, 1997), Chapter 12, 

“Foreign labor statistics,” pp. 114-15; and Chris Sparks, Theo Bikoi, and Lisa Moglia, “A 

perspective on U.S. and foreign compensation costs in manufacturing,” Monthly Labor 

Review, June 2002, pp. 36-50, especially p. 49. 

107 Sparks, Bikoi, and Moglia, “U.S. and foreign compensation costs,” p. 49. 

108 Xiaochun Qiao, China’s Aging and Social Security of the Elderly: With 

Reference to Japan’s Experiences, Japan External Trade Organization, IDE-JETRO

Visiting Research Fellow Monograph Series No. 388 (Chiba, Japan, Institute of 

Developing Economies, 2004). 

61
 109 “Shehui baoxianfei zheng jiao zanxing tiaoli” (“Provisional regulations for 

payment of social insurance fees”), in Laodong he shehui baoxian zhengce xuanchuan 

cailiao (Materials on Social Insurance Policy Announcements), Beijing, Haidian District 

Labor and Social Security Office, Regulation number 259, promulgated Jan. 22, 1999. 

110 Wage-reporting instructions, p. 2-5. 

111 BLS Handbook, pp. 114-15; Sparks, Bikoi, and Moglia, “U.S. and foreign 

compensation costs,” p. 37. 

112 All data in this paragraph are from China Ministry of Labor, Zhongguo 

laodongli shichang gongzi zhidao jiawei (2003 nian) [China Labor Force Market Wage 

Guide 2003], (Beijing, China Labor Social Security Press, 2004), p. 379. 

113 Ibid., p. 379. 

114 Loraine A. West, “Pension reform in China: Preparing for the future,” Journal 

of Development Studies, Feb. 1999, p. 165. In some cities, the social benefit payment that 

the enterprise is required to pay the government is not strictly a percentage of whatever 

the total gross salary bill is. For example, in Shanghai for 2003, enterprises had to pay 

43.5 percent of the total wage bill, subject to the following constraints: if the reported 

total wage bill divided by the reported number of employees averaged less than 60 

percent of Shanghai’s average monthly salary for the first half of 2003, the enterprise still 

had to pay 43.5 percent of that minimum salary threshold; the maximum payment the 

enterprise was required to remit was 43.5 percent of the total wage bill that would 

represent 3 times the average 2003 Shanghai wage. (See Lulu Zhang, “Shanghai region: 

Updates on Shanghai social benefit affecting FIE monthly overheads,” China Briefing; 

The Practical Application of China Business, June 2004, p. 10.) This procedure is 

supposed to be applied nationwide, based on State Council Document Number 6. See 

also Loraine A. West and Daniel Goodkind, Pension Management and Reform in China, 

NBR Executive Insight Series No. 15 (Seattle, National Bureau of Asian Research, 1999), 

p. 3.) 

115 Data for Changshu City are from Qiye shenbao shehui baoxian jiaofei yewu 

zhinan (Business Guide to Enterprises on Social Insurance Payments), Jan. 15, 2004; on 

the Internet at http://www.changshu.gov.cn/H/content/HQA0000000000002837.htm.

Data for Wuxi City are from Shehui baoxianfei jiaofei bili mingxi biao (Table of Detailed 

Comparisons of Required Social Insurance Payments), 2858 fuwuwang (2858 service 

Internet site) at http://www.wx2858.com/XCBST/jyzn/shehuibaoxian.asp. 

116 China Labor Statistical Yearbook 2003, pp. 471, 575-81. China had 21.3 

million TVE’s of all kinds in 2002, but only 85,000 of them had any rural old-age pension 

insurance. By yearend 2002, a cumulative total of 54.6 million people had ever 

contributed to any rural social pension insurance scheme, but during 2002, only 4.1 

million contributed to such a system. 

62
 117 Fox and Zhao, “China’s labor market reform;” Qiao, China’s Aging and Social 

Security.

118 Xiao-yuan Dong, “The changing wage-structures in the 1990s: A comparison 

between rural and urban enterprises in China,” paper presented at the International 

Research Conference on Poverty, Inequality, Labor Market and Welfare Reform in 

China, Australian National University, Canberra, Australia, Aug. 2004, Table 1, pp. 28-

29; on the Internet at http://econrsss.anu.edu.au/pdf/china-abstract-pdf/Dongpaper.pdf. 

119 Kim Woodard and Anita Qingli Wang, “Acquisitions in China: A View of the 

Field,” China Business Review, Nov.-Dec. 2004, pp. 34-38, and “Acquisitions in China: 

Closing the Deal,” China Business Review, Jan.-Feb. 2005, p. 35. 

120 See Fox and Zhao, “China’s labor market reform.” 

121 Richard Jackson and Neil Howe, The Graying of the Middle Kingdom 

(Washington, DC, Center for Strategic and International Studies and Prudential 

Foundation, 2004), p. 14. 

122 Hale and Hale, “China takes off,” p. 46; Lardy, “United States-China ties;” and 

Henny Sender, “Self-interest may lead China to revalue yuan,” Wall Street Journal, Apr. 

19, 2004, p. A2. 

123 Knight and Yueh, “Urban insiders versus rural outsiders.” 

124 Jianchun Yang, “China working time statistics,” on the Internet at 

http://www.insee.fr/en/nom_def_met/colloques/citygroup/pdf/China-general.pdf; China 

Labor Statistical Yearbook 2004, p. 111; personal communication with NBS officials. 

125 Yang, “China working time statistics,” p. 1. 

126 See “Excessive overtime in Chinese supplier factories: Causes, impacts, and 

recommendations for action,” Verité Research Paper, Sept. 2004, on the Internet at 

http://www.verite.org/Excessive%20Overtime%20in%20Chinese%20Factories.pdf; and 

Leslie T. Chang, “At 18, Min finds a path to success in migration wave,” Wall Street 

Journal, Nov. 8, 2004, p. A1. 

127 See the first section of this report, “Manufacturing employment in China,” 

subsection on “A major statistical anomaly,” text and endnote 48. 

128 China Village and Town Enterprise Yearbook 2003, p. 219. 

129 Employment weights are used to calculate an estimate of national total labor 

compensation in manufacturing. 

63
 130 Note again that the data for China refer to all employees, while the figures for 

the United States and other countries refer to production workers. Employees have 

higher compensation than production workers, so the data for China are overstated to an 

unknown degree for these comparisons. 

131 World Bank. World Development Report 2004: Making Services Work for 

Poor People (Washington, DC: World Bank, 2003), p. 265. 

http://econ.worldbank.org/wdr

The purchasing power parity exchange rate is a relative price indicator that refers to all 

the goods and services that go into the GDP. 

132 “Economic weight-watching; China’s economy is larger than it looks,” 

Economist, Sept. 30, 2004. 

133 World Bank, World Development Report 2004, pp. 252-253). 

134 West, “Pension reform in China,” p. 172. 

135 Fox and Zhao, “China’s labor market reform,” p. 37. 

136 Thomas G. Rawski, personal communication, May 28, 2004. 

137 Section on “Manufacturing employment in China,” subsection on “Migrant 

manufacturing workers.” 

 

138 Shanghai municipality, for example, excludes from its employment statistics 

data on in-migrant workers from other provinces, as discussed in the first section of this 

report, “Manufacturing employment in China,” subsection on “Migrant manufacturing 

workers.” 

139 See Nicholas R. Lardy, “Do China’s abusive labor practices encourage 

outsourcing and drive down American wages?” testimony presented before the Senate 

Democratic Policy Committee Hearing, Mar. 29, 2004; on the Internet at 

http://democrats.senate.gov/dpc/hearings/hearing14/lardy.pdf. 

140 Rawski, personal communication, May 28, 2004; Fox and Zhao, “China’s 

labor market reform,” pp. 3, 22. 

141 See the first section of this report, “Manufacturing employment in China,” 

table 1. 

142 “Is the wakening giant a monster?” The Economist, Feb. 15, 2003, pp. 63-65. 

143 George Stalk and Dave Young, “How China gets our business,” Washington 

Post, Mar. 7, 2004, p. B3. 

64
 144 Norihiko Shirouzu, “China drives auto-parts shift,” Asian Wall Street Journal, 

June 10, 2004, p. A5. 

145 Joseph Szczesny, “China an exporter by 2007? Will too many cars force 

Chinese automakers to begin selling outside the Middle Kingdom?” on the Internet at 

http://www.thecarconnection.com/index.asp?article=7233. 

146 “Is the wakening giant a monster?” p. 63. 

147 Stalk and Young, “How China gets our business,” p. B3. 

148 Chinese Academy of Social Sciences, Industry Economic Research Institute,

Zhongguo gongye fazhan baogao [China’s Industrial Development Report], (Beijing, 

Economic Management Press, 2001), pp. 109, 547. 

149 Szczesny, “China an exporter by 2007?”

150 Hale and Hale, “China takes off,” p. 46. 

151 Lardy, “China’s abusive labor practices.” 

152 Fox and Zhao, “China’s labor market reform.” 

153 Matt Forney, “Tug-of war over trade: As China becomes the world’s factory, 

U.S. and European manufacturers are hurting,” Time International (Europe Edition), Feb. 

23, 2004, p. 34. 

154 “The dragon and the eagle,” The Economist, Sept. 30, 2004. 

155 See also Lardy, “China’s abusive labor practices.” 

156 Nicholas R. Lardy, discussant, BLS seminar, Washington, DC, Nov. 8, 2004. 

157 See Fox and Zhao, “China’s labor market reform.” 

158 Knight and Yueh, “Urban insiders versus rural outsiders.” 

159 Simon Appleton and Lina Song, “The evolution of wage structure in urban 

China during reform and retrenchment,” paper presented at the International Research 

Conference on Poverty, Inequality, Labor Market and Welfare Reform in China, 

Australian National University, Canberra, August 2004, p. 2; on the Internet at 

http://econrsss.anu.edu.au/chinaconfabstracts.htm. 

160 Thomas G. Rawski, “Recent developments in China’s labor economy,” revised 

Nov. 2003 from a report prepared for the International Labor Office in Jan. 2002, p. 17; 

65
 

see also Fox and Zhao, “China’s labor market reform,” pp. 3, 22; and the entire Rawski 

article. 

161 Jianchun Yang, “2002 nian zhongguo jiuye qingkuang” [“China 2002 

employment situation”], Zhongguo renkou tongji nianjian 2003 (China Population 

Statistics Yearbook 2003) (Beijing, China Statistics Press, 2003). 

162 Rawski, “Recent developments,” p. 27; see also Bureau of Labor Statistics, 

“International comparisons of hourly compensation costs for production workers in 

manufacturing, 1975-2003”; on the internet at http://bls.gov/fls/home.htm.

163 Paul French, “Welcome to bubble town,” Asian Wall Street Journal, May 27, 

2004, p. A7. 

164 Iain McDaniels, “A critical eye on Shanghai: Will the city’s extraordinary 

growth continue?” China Business Review, Jan.-Feb. 2004, pp. 8-9, especially p. 8. 

165 French, “Welcome to bubble town,” p. A7. 

 

166 “String of pearls: China’s development,” Economist, Nov. 20, 2004, pp. 43-44. 

167 Mu Xin and Zhenpeng Liang, “Mei caigou shang xuejian Zhongguo fangzhi 

dingdan” [“U.S. purchasers have cut textile orders from China”], Xin kuai bao [New 

Express], Apr. 28, 2004; on the Internet at 

http://www.ycwb.com/gb/content/2004-04/28/content_683077.htm. 

168 French, “Welcome to bubble town.” 

169 “String of pearls,” Economist, p. 44. 

170 See also McGuckin and Spiegelman, China’s Experience, pp. 4, 23. 

171 China Radio International, “Economist predicts rise in China’s middle class,” 

7/30/2001. 

172 Craig S. Smith, “China, a billion-person market in transition,” International 

Herald Tribune, July 17, 2002, p. 2. 

173 Powell, “China’s great step forward.” 

174 Xin kuai bao [New Express] web site, June 1, 2004. “Caifu: Zhongguo 

zhuangda de shechipin xiaofei qunti” [“Wealth: China’s growing luxury consumption 

groups”]. From Jinyang Wang [Guangdong Jinyang Network & Information Company, 

Ltd.], May 31, 2004: http://www.ycwb.com/gb/content/2004-05/31/content_699899.htm. 

66
 175 Hale and Hale, “China takes off.” 

176 Smith, “China, a billion-person market in transition,” p. 2; Evan Ramstad, 

“Proview assembles its success by keeping costs to a bare minimum,” Asian Wall Street 

Journal, May 10, 2004, p. A9. 

177 Kevin Honglin Zhang, “What attracts foreign multinational corporations to 

China?” Contemporary Economic Policy, Vol. 19, No. 3, July 2001, pp. 336-346. 

178 Ramstad, “Proview assembles its success,” p. A9; Stalk and Young, “How 

China gets our business.” 

179 Jeffrey E. Garten, “When everything is made in China,” Business Week, June 

17, 2002, p. 20. 

180 Zhang, “What attracts foreign multinational corporations to China?” 

181 Hsuju Ho, “Beijing, Yangtze delta land most expensive,” The Standard, 

Greater China’s Business Newspaper, Apr. 1, 2004. 

182 McDaniels, “A critical eye on Shanghai,” p. 9; French, “Welcome to bubble 

town,” 2004, p. A7. 

183 Ho, “Beijing, Yangtze delta land most expensive.” 

184 Andy Xie, “China: The third growth anchor,” Financial Times Information; 

reproduced in “Shanghai Securities News: Total of 200m people in China to become 

middle class within coming 5 years,” China Intelligence Wire, London, July 25, 2001. 

185 Zhang, “What attracts foreign multinational corporations to China?” 

186 Winter Wright, “Doing business in China,” AmCham China [American 

Chamber of Commerce in China] Brief, vol. 12, no. 5, June 2004, pp. 11-13, 26. 

187 Lardy, “United States-China ties.” 

188 R. Caves, Multinational Enterprise and Economic Analysis, 2nd edition 

(Cambridge, England: Cambridge University Press, 1996); Zhang, “What attracts foreign 

multinational corporations to China?” 

189 Wright, “Doing business in China,” p. 13. 

190 Bloomberg, “Factory owners left in dark over power crisis,” The Standard, 

Greater China’s Business Newspaper, July 1, 2004. 

191 Bloomberg, “Commerce Ministry eyes raising taxes to cool textile exports,” 

The Standard, Greater China’s Business Newspaper, June 1, 2004. 

67
 192 American Chamber of Commerce in China, “Intellectual property rights in 

China: A spiraling problem,” and “AmCham publishes its 6th White Paper,” AmCham 

China Brief, Vol. 12, No. 8, Oct. 2004, pp. 5, 17, 23-24. 

193 French, “Welcome to bubble town.” 

194 Bing Ho and Hal Fiske, “Legal brief; Branding lost (and found) in translation,” 

AmCham China Brief, Vol. 12, No. 5, June 2004, pp. 9, 24. 

 

195 Associated Press, “U.S. to press China on trade case,” International Herald 

Tribune, June 23, 2004. http://www.iht.com/articles/526132.html

Donald Evans (U.S. Secretary of Commerce), “U.S.-China economic relations,” 

presentation at AmCham-China, Beijing, June 23, 2004. 

196 S. Richard Snodey, “Intellectual property security in China’s rapidly 

expanding commerce,” China Briefing; The Practical Application of China Business,

Vol. 5, No. 5, June 2004, pp. 6-8. 

68
Table 1. Official reported manufacturing employment in China, yearend 1978-2002

[In millions]

Total Rural Derived urban1 Total Men Women Total State-owned units Urban collective- owned units Other ownership units Industry Manufacturing2

1978................. 53.32 17.34 35.98 -- -- -- 35.95 24.49 11.46 -- 17.34 --

1980................. 58.99 19.42 39.57 -- -- -- 39.47 26.01 13.46 -- 19.42 --

1985................. 74.12 27.41 46.71 -- -- -- 46.20 29.75 16.08 .37 41.37 --

1986................. 80.19 31.39 48.80 -- -- -- 48.20 30.96 16.80 .46 47.62 --

1987................. 83.59 32.97 50.62 -- -- -- 49.88 32.09 17.24 .58 52.67 --

1988................. 86.52 34.13 52.39 -- -- -- 51.49 33.27 17.45 .77 57.03 --

1989................. 85.47 32.56 52.91 -- -- -- 52.06 33.44 17.54 1.08 56.24 --

1990................. 86.24 32.29 53.95 -- -- -- 53.04 33.95 17.73 1.35 55.72 51.50

1991................. 88.39 32.68 55.71 -- -- -- 54.43 34.82 17.82 1.80 58.14 53.73

1992................. 91.06 34.68 56.38 -- -- -- 55.08 35.26 17.47 2.36 63.36 58.56

1993................. 92.95 36.59 56.36 -- -- -- 54.69 34.44 15.95 4.30 72.60 67.10

1994................. 96.13 38.49 57.64 54.92 30.31 24.61 54.34 33.21 15.15 5.98 69.62 64.34

1995................. 98.03 39.71 58.32 54.93 30.11 24.82 54.39 33.26 14.17 6.96 75.65 69.92

1996................. 97.63 40.19 57.44 53.44 29.52 23.92 52.93 32.18 13.46 7.28 78.60 72.65

1997................. 96.12 40.32 55.80 51.30 28.44 22.86 50.83 30.11 12.44 8.27 361.49 356.84

1998................. 383.19 339.29 343.90 338.26 -- -- 337.69 318.83 37.42 311.44 73.34 67.79

1999................. 81.09 39.53 41.56 35.54 20.12 15.42 34.96 16.48 6.22 12.25 73.95 68.35

2000................. 80.43 41.09 39.34 33.01 18.75 14.25 32.40 14.15 5.19 13.06 74.67 69.01

2001................. 80.83 42.96 37.87 30.70 17.52 13.18 30.10 11.94 4.25 13.91 76.15 70.38

2002................. 83.07 45.06 38.02 29.81 16.98 12.83 29.07 9.79 3.46 15.82 76.68 70.87

1 Derived urban manufacturing employment is calculated as national manufacturing employment minus rural manufacturing employment.2 TVE manufacturing employment was reported officially only for 2002, when it constituted 92.4 percent of TVE industry employment; figures for other years are estimated, using the same percentage.3 Break in series.

NOTES: Dash indicates data not available. All figures refer to the mainland provinces of China, not including Hong Kong, Macao, or Taiwan. The data are from China's annual yearend reporting system, not from census data, 

and are not adjusted to agree with census data. 

SOURCES: China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), pp. 8, 10, 13, 16, 21, 23-26, 171, 473. China Ministry of

Agriculture, China TVE Yearbook Editorial Committee, ed., China Village and Town Enterprise Yearbook 2003 [in Chinese] (Beijing, China Agriculture Publishing House, 2003), p. 130.

 Manufacturing employment in urban units Urban manufacturing staff and workers Town and village enterprises (TVE's)

Year

Manufacturing employment

69
Table 2. Manufacturing employment excluding surplus laid-off manufacturing workers in China, yearend 1995-2002

[In millions]

Year Total manufacturing 

employment1

Surplus laid-off 

manufacturing 

workers

 Rural manufacturing 

employment

Derived urban 

manufacturing 

employment1

Manufacturing 

employment in urban 

units1

Manufacturing urban 

staff and workers1

1995..................... 95.90 2.13 39.71 56.19 52.80 52.26

1996..................... 94.40 3.23 40.19 54.21 50.21 49.70

1997..................... -- -- -- -- -- --

19982.................... 83.19 (3) 39.29 43.90 38.26 37.69

1999..................... 81.09 (3) 39.53 41.56 35.54 34.962000..................... 80.43 (3) 41.09 39.34 33.01 32.402001..................... 80.83 (3) 42.96 37.87 30.70 30.102002..................... 83.07 (3) 45.06 38.02 29.81 29.07

1 Excludes surplus laid-off manufacturing workers. Data for 1995-96 are calculated from the reported figures, shown in table 1, minus the number

of surplus laid-off manufacturing workers. Data for 1998-2002 are the reported figures.

2 Break in series.3 Data are not shown because surplus laid-off manufacturing workers are not included in total manufacturing employment after 1997. Only 1995 and

1996 data are used to calculate estimates presented in this table.

NOTE: Dash indicates data not available. SOURCES: Table 1; China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 1996

(Beijing, China Statistics Press, 1996), p. 409; and China Labor Statistical Yearbook 1997 (Beijing, China Statistics Press, 1997), p. 405.

70
Table 3. Employment in China: comparison of census and enterprise data, 2000

[In millions]

Sector Census data Enterprise data Difference1

Total employment...................................................................... 709.71 629.78 79.93

Farming, forestry, animal husbandry, and fisheries................. 456.89 333.55 123.34

Mining and quarrying............................................................ 7.41 5.97 1.44

Manufacturing.................................................................... 88.43 80.43 8.00

Production and supply of electricity, gas, and water............... 4.44 2.84 1.60

Construction........................................................................ 19.05 35.52 -16.47

Geolo y gical prospecting and water conservanc ...................... 0.90 1.10 -0.20

Transport, storage, post, and telecommunications.................. 18.30 20.29 -1.99

Wholesale and retail trade and catering services.................... 47.48 46.86 0.62

Finance and insurance.......................................................... 4.19 3.27 0.92Real estate trade................................................................. 1.64 1.00 0.64Social services..................................................................... 15.27 9.21 6.06

Health care, sports, and social welfare.................................. 7.53 4.88 2.65

Education, culture and arts, radio, film, and television............ 18.16 15.65 2.51Scientific research and polytechnical services......................... 1.59 1.74 -0.15

Government and party agencies and social organizations....... 16.69 11.04 5.65

Others................................................................................ 1.74 56.43 -54.69

1 Difference is census figure minus enterprise figure.

NOTES: Enterprise data are for yearend 2000; census data are from November 1, 2000, which was 2 months earlier. Therefore, 

the numbers from the two sources are not expected to be exactly the same. Census figures are derived by the author from the censuslong-form sample and refer to the population aged 15 years and older.

SOURCES: Census data are from China National Bureau of Statistics, Tabulation on the 2000 Population Census of the People's Republic

of China, vol. 2 [in Chinese] (Beijing, China Statistics Press, 2002), pp. 1569-70. Enterprise data are from China National Bureau of Statistics

and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), pp. 8-9.

71
Table 4. Manufacturing employment in China: two alternative series, yearend 1990-2002

[In millions]

Year Urban and TVE1

 manufacturing 

employment

Official reported manufacturing 

employment

1990................................... 105.45 86.24

1991................................... 109.44 88.39

1992................................... 114.94 91.06

1993................................... 123.46 92.95

1994................................... 121.98 96.13

1995................................... 128.24 98.03

1996................................... 130.09 97.63

1997................................... 112.64 96.12

1998................................... 111.69 83.19

1999................................... 109.91 81.09

2000................................... 108.35 80.43

2001................................... 108.25 80.83

2002................................... 108.88 83.07

1

 Town and village enterprises.

SOURCE: Calculated from table 1.

72
Table 5. Manufacturing employment in G7 countries, 1995-2002

[In thousands]

Year G71 total United States Canada Japan France Germany Italy United Kingdom

1995................ 59,825 20,493 1,907 14,520 4,115 9,017 4,831 4,942

1996................ 59,437 20,518 1,926 14,420 4,073 8,643 4,781 5,0761997................ 259,567 220,835 2,016 14,390 4,035 8,521 4,746 5,024

1998................ 259,204 220,733 2,102 13,790 4,047 8,688 4,820 5,0241999................ 258,024 220,070 2,202 13,410 4,031 28,591 4,820 4,900

2000................ 257,353 219,644 2,254 13,180 4,081 8,646 4,796 4,752

2001................ 55,606 18,434 2,230 12,800 4,127 8,626 4,774 4,6152002................ 53,321 17,233 2,291 11,990 4,059 8,491 4,814 4,443

1 The G7 countries are the United States, Canada, Japan, France, Germany, Italy, and the United Kingdom.2 Break in series. For the United States, all breaks are due to updated population controls. Furthermore, data for 2000 forward for the United

States are based on the 2002 North American Industry Classification System; data for earlier years are based on the 1987 Standard Industrial Classification. The 1999 break for Germany reflects the incorporation of an improved method of data calculation and a change in coverage to persons living in private households only.  NOTE: The data in this table are obtained mainly from household surveys, such as the Current Population Survey for the United States. Household surveys are more comparable across countries than are establishment surveys.

SOURCE: Comparative Civilian Labor Force Statistics, Ten Countries, 1960-2004 (Bureau of Labor Statistics, May 13, 2005); on the Internet at

http://www.bls.gov/fls/flslforc.pdf.

73
Average earnings per 

employee

Table 6. Published earnings of manufacturing employees in China, 2002

Category of manufacturing workers Total earnings paid (billions of yuan) Number of employees (yearend, millions) Average number of employees (millions) (yuan) Average living subsidy (yuan)

Manufacturing in urban units.................................................... 334.39 29.81 229.98 11,152 --

On-post urban manufacturing staff and workers............................... 321.90 29.07 29.26 11,001 --Other urban manufacturing employment............................... -- 0.74 -- 17,237 --

Laid-off urban manufacturing staff and workers............................... -- 9.13 -- -- 2,213Manufacturing TVE's1..................................................................... 489.22 70.87 270.62 26,927 --

Large-scale manufacturing TVE's1............................................. 168.94 19.05 218.98 28,899 --

1 TVE's are town and village enterprises.2 Derived from other numbers reported in the table or in the sources.

NOTES: Dash indicates data not available or not applicable. In the sources, remuneration for workers in urban manufacturing units and for other urban

manufacturing employees is called "earnings" (laodong baochou ), whereas remuneration for on-post urban manufacturing staff and workers is called "wages" 

(gongzi). For manufacturing TVE's, only the total 2002 expenditure for earnings (laodongzhe baochou ) is reported; the average per employee is not directly reported. All figures for manufacturing in urban units exclude self-employed individuals and small privately owned firms.

SOURCES: China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), 

pp. 29, 34, 46, 169, 171, 179, 230, 243, 249, 473; China Ministry of Agriculture, TVE Yearbook Editorial Committee, ed., China Village and TownEnterprise Yearbook 2003 [in Chinese] (Beijing, China Agriculture Publishing House, 2003), pp. 130-31.

74
Table 7. Urban manufacturing employment and earnings by subsector in China, 2002

Urban manufacturing subsector Urban employees 

(yearend)

Average earnings per 

employee

(yuan)

Total manufacturing in urban units.................................................... 29,984,619 11,152

Tobacco processing................................................................ 233,485 23,744

Electronics and telecommunications.................................................. 1,623,783 17,636

Petroleum processing and coking products........................................ 565,505 17,357

Smelting and pressing of ferrous metals............................................ 1,900,648 15,032

Transportation equipment manufacturing.......................................... 2,319,421 14,409

Medical and pharmaceutical products............................................... 844,857 13,207

Instruments and office machinery...................................................... 464,762 12,720

Smelting and pressing of nonferrous metals...................................... 755,646 12,491

Electric equipment and machinery..................................................... 1,441,399 12,405

Chemical fibers manufacturing.......................................................... 263,378 11,404

Printing and record medium reproduction......................................... 493,497 10,863

Ordinary machinery manufacturing................................................... 1,921,315 10,668

Special-purpose equipment manufacturing........................................ 1,400,594 10,406

Cultural, educational, and sport products.......................................... 294,636 10,390

Chemical raw materials and products................................................ 2,213,256 10,359

Plastic products................................................................. 606,800 10,131

Metal products................................................................. 897,455 10,075

Food products manufacturing............................................................ 621,757 10,064

Rubber products................................................................ 377,633 10,055

Beverage manufacturing............................................................ 740,250 9,619

Leather, furs, down, and related products.......................................... 578,590 9,108

Garments and other fiber products.................................................... 1,336,191 9,066

Furniture manufacturing............................................................ 180,484 8,881

Other manufacturing............................................................ 601,416 8,781

Papermaking and paper products....................................................... 592,400 8,668

Nonmetal mineral products............................................................ 2,116,034 8,123

Food processing................................................................ 977,439 7,965

Timber, bamboo, natural fiber and straw products.................. 267,666 7,339

Textile industry.................................................................. 2,841,565 7,268

NOTES: These data refer only to urban manufacturing employment and earnings.The subsectors

listed here refer to 29.47 million of China's urban manufacturing workers. Rural manufacturing 

workers in each subsector undoubtedly have lower earnings than those displayed here. The earnings

figures shown do not include required employer social insurance payments or other nonwage labor

costs.

SOURCE: China National Bureau of Statistics and China Ministry of Labor, compilers, 

China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), pp. 179 and 218-25.

75
Yuan U.S. dollars Yuan U.S. dollars Yuan U.S. dollars

Total for manufacturing urban units and TVE's1.............................. 100.61 8,186 10,363 $1,252 864 $104 4.73 $0.57

Manufacturing urban units................................................ 29.98 11,152 17,152 2,071 1,429 173 7.87 0.95

On-post urban manufacturing staff and workers............. 29.26 11,001 16,920 2,043 1,410 170 7.76 0.94

Other urban manufacturing employment................................ 0.72 17,237 26,511 3,202 2,209 267 12.17 1.47

Manufacturing TVE's1....................................................... 70.62 6,927 7,481 904 623 75 3.40 0.41

Large-scale manufacturing TVE's1................................... 18.98 8,899 9,611 1,161 801 97 4.37 0.53

1 TVE's are town and village enterprises.

hours of work per year and that TVE workers perform 2,200 hours per year. (See text for details.)

Annual compensation per 

employee

Monthly compensation per 

employee

Hourly compensation per 

employee

Average 

number of 

employees

(millions)

Average 

earnings per 

employee

(yuan)

Table 8. Estimated labor compensation of manufacturing employees in China, 2002

NOTES: Total labor compensation for urban workers is 1.538 times earnings and for TVE workers is 1.08 times earnings. US dollars calculated at the 2002 prevailing

commercial exchange rate: 8.28 yuan = U.S.$ 1. Hourly compensation is calculated under the assumption that urban manufacturing employees perform 2,179 actual

Category of manufacturing workers

SOURCES: Table 1; China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 

2003), pp. 29, 34, 46, 169, 171, 179, 230, 249, 473; China Ministry of Agriculture, TVE Yearbook Editorial Committee, ed., China Village and Town Enterprise Yearbook 2003 [in Chinese] (Beijing, China Agriculture Publishing House, 2003), pp. 130-31.

76
Table 9. Compensation of urban manufacturing employees and TVE1 industry employees, Yangtze Delta provinces and Guangdong, China, 2002 

Yuan U.S. dollars Yuan U.S. dollars Yuan U.S. dollars

Urban manufacturin y g emplo ees:

 National average................................ 11,152 17,152 $2,071 1,429 $173 7.87 $0.95

Shanghai municipality......................... 21,957 33,770 4,078 2,814 340 15.50 1.87Zhejiang province................................. 13,435 20,663 2,496 1,722 208 9.48 1.15Jiangsu province.................................. 11,731 18,042 2,179 1,504 182 8.28 1.00Guangdong province............................... 14,958 23,005 2,778 1,917 232 10.56 1.28TVE1 industry employees:

 National average................................ 6,891 7,442 $899 574 $69 3.13 $0.38

Shanghai municipality......................... 11,939 12,894 1,557 1,075 130 5.86 0.71

Zhejiang province................................. 10,188 11,003 1,329 917 111 5.00 0.60Jiangsu province.................................. 8,143 8,794 1,062 733 89 4.00 0.48

Guangdong province............................... 8,345 9,013 1,088 751 91 4.10 0.49

1 TVE's are town and village enterprises.

NOTES: U.S. dollars are calculated at the 2002 prevailing commercial exchange rate: 8.28 yuan = U.S.$1. Hourly wage estimates for urban workers

are calculated under the assumption that urban manufacturing employees perform 2,179 actual hours of work per year and that TVE workers perform2,200 hours per year. (See text for details.)

SOURCES: Table 8; China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China

Statistics Press, 2003), pp. 179, 473; China Ministry of Agriculture, TVE Yearbook Editorial Committee, ed., China Village and Town EnterpriseYearbook 2003 [in Chinese] (Beijing, China Agriculture Publishing House, 2003), pp. 156, 174.

Adjusted monthly labor compensation Adjusted hourly labor compensation Province Annual earnings (yuan) Adjusted annual labor compensation

77
Table 10. Annual percent change in average real (price-adjusted) earnings of urban 

manufacturing staff and workers in China, selected years, 1979-2002

[In percent]

Total Urban state-owned 

units

Urban collectiveowned unitsOther urban 

ownership units

1979................... 9.1 7.4 4.4 --

1980................... 5.4 5.2 7.5 --

1985................... 4.1 3.4 6.9 17.9

1986................... 7.1 8.6 4.3 7.5

1987................... 2.2 2.6 0.8 7.6

1988................... -0.1 0.5 -2.5 14.0

1989................... -4.5 -4.4 -5.7 0.9

1990................... 7.7 8.6 5.2 4.4

1991................... 5.1 4.1 5.4 12.9

1992................... 6.0 6.2 3.3 5.5

1993................... 9.4 6.2 5.4 1.1

1994................... 2.3 1.2 -0.3 0.1

1995................... 3.3 1.6 3.5 1.8

1996................... 0.3 -0.4 -0.9 0.8

1997................... 2.0 0.5 -0.3 2.3

1998................... 5.1 2.3 2.4 -1.8

1999................... 11.8 10.5 7.6 10.3

2000................... 11.4 11.5 6.6 8.5

2001................... 10.9 11.3 5.7 7.9

2002................... 13.7 14.6 12.0 9.7

NOTE: Dash indicates data are not available.

SOURCE: China National Bureau of Statistics and China Ministry of Labor, compilers, China

Labor Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), pp. 36, 39, 42, 45. 

Urban manufacturing staff and workers

Year

78
Table 11. Average annual real earnings of urban manufacturing staff and workers in China, 1990-2002

[In constant 2002 yuan and constant 2002 dollars]

Yuan U.S. dollars Yuan U.S. dollars Yuan U.S. dollars Yuan U.S. dollars

1990................... 5,058 $611 5,599 $676 4,149 $501 6,833 $825

1991................... 5,316 642 5,828 704 4,373 528 7,714 932

1992................... 5,635 681 6,189 748 4,517 546 8,138 983

1993................... 6,165 745 6,573 794 4,761 575 8,228 994

1994................... 6,307 762 6,652 803 4,746 573 8,236 995

1995................... 6,515 787 6,759 816 4,913 593 8,384 1,013

1996................... 6,534 789 6,731 813 4,868 588 8,452 1,021

1997................... 6,665 805 6,765 817 4,854 586 8,646 1,044

1998................... 7,005 846 6,921 836 4,970 600 8,490 1,025

1999................... 7,832 946 7,647 924 5,348 646 9,365 1,131

2000................... 8,724 1,054 8,527 1,030 5,701 689 10,161 1,227

2001................... 9,675 1,169 9,490 1,146 6,026 728 10,964 1,324

2002................... 11,001 1,329 10,876 1,314 6,749 815 12,027 1,453

NOTE: This table presents only the reported annual earnings, which have not been adjusted to include other labor compensation costs, such as 

required employer payments to municipal social insurance systems.

SOURCE: China National Bureau of Statistics and China Ministry of Labor, compilers, China Labor Statistical Yearbook 2003 (Beijing, China Statistics

Press, 2003), pp. 34-45.

Urban manufacturing staff and workers

Year Urban state-owned units Total Urban collective-owned units Other urban ownership units

79
Chart 1. Structure of manufacturing employment in China, yearend 2002

(Numbers in millions)

1 Town and village enterprises.

NOTE: Official total yearend 2002 manufacturing employment in China was 83.07 million, of which 38.02 million was urban and

45.06 million was rural. But if non-urban manufacturing employment was best represented by TVE employment of 70.87 million,then the total yearend 2002 China manufacturing employment was 108.88 million.

SOURCES: Table 1 and text.

Total: Re

ported 83.07 OR (urban and TVE1

) 108.88

Of which:

 Rural reported 45.06 OR TVE 70.87

 Of which: Urban 38.02

 Of which: Employment in urban units 29.81

Of which:

 Individual and private business 8.21

Of which:

 Private enterprises 5.64 Of which: Investors: 0.79 Hired workers: 4.85 Individual and household 2.57

Of which:

 On-post staff and workers 29.07 Of which: State-owned 9.79 Urban collective 3.46 Other ownership 15.82 Other 0.74

80
Chart 2. Manufacturing employment in China, yearend 1990-2002

Millions Millions

Urban and TVE1

Reported

1 Town and village enterprises; manufacturing employment in this sector is derived from reported 

TVE industry employment.

SOURCES: Calculated from table 1.

90807060

140130120110100

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

14013012011010090807060

81
Chart 3. Employment by sector in the United States and China, 2002, in percent

 United States China

SOURCES: U.S. data are from Comparative Civilian Labor Force Statistics, Ten Countries, 1960–2004 (Bureau of Labor Statistics,

May 13, 2005); on the Internet at http://www.bls.gov/fls/flslforc.pdf. Chinese data are from official yearend enterprise reports aspublished in China Statistical Yearbook 2003 (Beijing, China Statistics Press, 2003), pp. 128–29.

Mining and 

construction

6.6%

Manufacturing

12.3%

Services

32.9%

Agriculture

48.2% Mining and 

construction

7.7%

Manufacturing

12.6%

Services

78.0%

Agriculture

1.7%

82
Chart 4. Average hourly compensation costs of manufacturing workers, selected economies and regions, 2002

U.S. = 100 ($21.11) U.S. = 100 ($21.11)

1 2

1 EU(15) are the European Union member countries prior to the expansion to 25 countries on May 1, 2004. 

2 Asian NIE's are the newly industrialized economies of Hong Kong, Korea, Singapore, and Taiwan.

SOURCES: Bureau of Labor Statistics, "International comparisons of hourly compensation costs for production workers in 

manufacturing, 1975-2003," Nov. 18, 2004; on the Internet at http://www.bls.gov/fls/home.htm. For China, data

are from this article and not from the BLS series. The data for China refer to all employees rather than just production workers.

100

3

12 12

94

88

33

0

80604020

120100

United States China Brazil Mexico EU(15) Japan Asian NIE's

120100806040200

83
Chart 5. Average real earnings of urban manufacturing staff and workers in China, 1990-2002

Yuan Yuan

Other urban ownership units, real earnings

Urban state-owned units, real earnings

Urban total manufacturing staff and workers, real earnings

Urban collective-owned units, real earnings

SOURCE: Table 11.

0

8,0006,0004,0002,000

12,00010,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

12,00010,0008,0006,0004,0002,0000

84
Exhibit 1. Components of Chinese urban earnings statistics 

The statistical concept of wage (gongzi) or earnings for on-post urban “staff and workers” 

includes the following components, whether the employees receive the earnings or 

benefits in money or in kind and whether the earnings or benefits are or are not taxable 

items: 

Monthly or annual salary income (including base earnings and additions based on 

position, seniority, wage scale, and so on) 

Earnings during on-the-job training, probationary period 

Employee income paid on an irregular basis 

 Hourly payment for work performed 

 Piecework payment for work performed 

 Bonus payments 

 Incentive, performance-based payments 

 Overtime pay 

 Hardship, danger pay 

 All kinds of subsidies in cash or in kind 

 Festival, holiday subsidy 

 Travel money, food allowance while traveling 

 Transport subsidy (car or shuttle bus provided, cash for bus or taxi, and so on) 

 Personal services such as baths, haircuts 

 Books, newspapers, magazines provided for employees 

 Meals provided, food allowance 

Housing subsidy (dormitory provided, or directly subsidized rent or purchase of housing) 

Individual income tax deducted from earnings and paid directly by enterprise to 

government 

Social insurance funds (pension, medical, unemployment insurance funds, and housing 

purchase fund) deducted from the employee’s wage and paid by the work unit to 

government on behalf of the employee 

Money for rent and utilities (electricity, water) 

Money given for fixed line or mobile phone 

Clothing subsidy 

Subsidy compensating workers for lack of vacation time 

Earnings during approved leaves of absence, pay for time not worked (regular vacation, 

compassionate leave, to visit relatives, family-planning operation, national or societal 

duty, study leave, leave due to sickness or injury) 

Anything that has the nature or spirit of labor earnings, even if it is not spelled out in the 

regulations 

SOURCE: Laodong gongzi; tongji taizhang [Labor wages; statistical accounts] 

(Beijing, Beijing Municipality Statistical Bureau, 2004), pp. 2-1 to 2-5. 

85
Glossary and Definitions 

Actual situation that year ─ ben nian shiji 

本年实际

Average earnings ─ pingjun laodong baochou 

 平均劳动报酬 

Average number of employees ─ pingjun jiuye renshu 

平均就业人数 

China labor force market wage survey – 

Zhongguo laodongli shichang gongzi diaocha 

中国劳动力市场工资调查

This survey was conducted by the Ministry of Labour and Social Security in 

2003 with reference to calendar year 2002 data. The survey was carried out in 

51 large and medium-sized cities and surveyed 11,704 enterprises, 37% of 

which were manufacturing enterprises. Staff and workers of all the surveyed 

enterprises totaled 860,000, of which 48% were in manufacturing industries. 

Cities ─ chengshi or cheng 

 城市 or 城 

Compensation of employees or laborers remuneration ─ 

 laodongzhe baochou 

 劳动者报酬 

Compensation survey – see “China labor force market wage survey” 

86
Currency, PRC ─ yuan, renminbi 

 元,人民币 

Earnings or remuneration or compensation ─ laodong baochou 

劳动报酬 

Employed, employment – Means currently working and being paid for the work (even 

if promised pay is in arrears). All these terms mean the same thing: 

jiuye congye zaiye 

就业 从业 在业

Employed workers, employees – congye renyuan jiuye renyuan

从业人员 就业人员

Employment in urban units ─ chengzhen danwei jiuye renyuan

 城镇单位就业人员 

Fuli feiyong or fuli fei – see “Welfare fund” 

Government ministries – see Ministries 

Hired laborers or hired hands ─ gugong renshu 

 雇工人数 

87
Housing fund ─ a fund in which money is set aside for each worker by 

name—money that the worker can use to help buy an apartment 

zhufang gong jijin 

住房公积金

Hukou – see “Population residence registration” 

Individual and household enterprises ─ see also “Self-employed individual or family 

enterprises” and “Manufacturing economic organizations – urban” 

 getihu 

 个体户 

Industry ─ gongye 

 工业 

Investors ─ touzizhe renshu 

 投资者人数 

Labor compensation, total labor compensation ─ laodongzhe baochou 

 劳动者报酬 

Labor situation ─ laodong qingkuang

 劳动情况 

88
Laid-off staff and workers ─ xiagang zhigong

 下岗职工 

Manufacturing economic organizations – urban 

Most manufacturing employees in cities are employed by workplaces and 

factories organized as work units (danwei); their employees totaled 30 million 

at yearend 2002. These manufacturing work units may be state-owned 

enterprises, urban collectives, or private sector enterprises. 

Smaller in size than the work units are the “private enterprises” (siying qiye), 

which had a total of 5.64 million manufacturing investors and employees in 

China’s cities in 2002. The definition of a siying qiye is that it is an 

economic organization that is privately owned and privately operated and has 

8 or more employees. There are three types of siying qiye: 

duzi qiye – exclusive investment, solely owned by a single investor 

独资企业

 hehuo qiye – partnership 

合伙企业

youxian zeren qiye – limited liability enterprise that has 2-30 investors 

有限责任企业

Smaller than the siying qiye are the individual and family-owned enterprises 

called getihu, which totaled 2.57 million manufacturing workers in China’s 

cities in 2002. A getihu has fewer than 8 employees. 

Manufacturing employment in urban units ─ 

chengzhen danwei zhizaoye jiuye renyuan 

城镇单位制造业就业人员 

See also “Manufacturing economic organizations – urban” 

89
Medical insurance fund ─ yiliao baoxian 

医疗保险 

Migrant, migration, to migrate – yimin 移民

 qianyi 迁移

 qianxi 迁徙

 yiju [literally, to migrate and change residence] 

移居

 qianju [literally, change one’s dwelling place] 

迁居

The above Chinese words for “migration” imply long-term or permanent 

migration involving a move and a permanent change of residence and perhaps, 

in the Chinese case, a change of hukou or permanent population residence 

registration. 

 liudong [literally flowing, as with water] 

流动

The term liudong is used for population or worker movement when the moves 

are not expected to be permanent or policy dictates that the move will not be 

permanent. 

Migrant workers – liudong laogong 

流动劳工

[literally, flowing or floating workers] 

90
Ministries involved in the collection and reporting of statistics on manufacturing 

employment and labor compensation in China: 

 China National Bureau of StatisticsZhonghua renmin gongheguo guojia tongjiju 

中华人民共和国国家统计局

Responsible for overseeing all statistics gathering in China. 

 China Ministry of Labour and Social SecurityZhongguo laodong he shehui baozhangbu 

中国劳动和社会保障部

Responsible for gathering and reporting statistics on city work units and 

their employment and wages, city social insurance funds, workers 

laid-off from city work units, and unemployment and re-employment in 

cities. 

China Ministry of Agriculture - 

Zhongguo nongyebu 

中国农业部

Responsible for gathering and reporting statistics on employment and 

labor compensation in China’s towns and rural areas. 

China State Administration for Industry and Commerce – 

Zhonghua renmin gongheguo guojia gongshang xingzheng guanli zongju 

中华人民共和国国家工商行政管理总局

Responsible for gathering and reporting statistics on self-employed 

workers, small family-owned businesses, and small privately owned and 

privately operated enterprises outside of agriculture. 

Not-on-post staff and workers ─ bu zaigang zhigong

 不在岗职工 

Off-post staff and workers ─ see “not-on-post staff and workers” 

“laid-off staff and workers” 

91
Old-age pension fund, pension insurance ─ yanglao baoxian 

养老保险 

On-post staff and workers ─ zai gang zhigong 

 在岗职工 

On-post staff and workers, as distinct from laid-off (off-post, not-on-post) staff and 

workers, as distinct from unemployed workers: 

These categories refer to workers in cities and not to workers in rural areas or 

towns. “On-post staff and workers” includes those adults in the legal 

working ages who are currently employed in urban work units (danwei) and 

who are being paid, or at least are supposed to be paid (though wage payments 

may be in arrears). “Laid-off” (or off-post or not-on-post) staff and workers 

are those employees in the working ages who have been formally laid off by 

their work units, but who still keep a formal tie with the former work unit, 

often for some of the following reasons: to keep their subsidized housing, for 

medical benefits, to keep other subsidies or benefits, so they can get a 

subsistence allowance, to get retraining and job-search assistance, or so that 

they will be called back if the work load of the enterprise picks up. 

“Unemployed” workers are those adults in cities who are listed as “urban 

registered unemployed” (see “unemployment rate”). 

Pearl River Delta (in Guangdong province) ─ 

zhujiang sanjiaozhou or zhusanjiao 

珠江三角洲 珠三角 

Population residence registration – hukou

户口

In practice, in China, it is difficult for someone born in a rural area or town to 

get permission to shift residence registration to a city. A rural-to-urban 

migrant with rural hukou might live in a city for years or decades without ever 

being granted a city permanent residence registration. 

92
 Temporary residence permit – zan zhu zheng

暂住证

A migrant who moves to a city to work is supposed to register with local 

authorities and get a temporary residence permit. 

PPP ─ purchasing power parity, international purchasing power parity 

A method used by the World Bank for comparing the real purchasing power 

of a national currency with the cost of the same “basket” of goods on the 

international market or in the United States. 

Privately owned and privately operated enterprises ─ siying qiye 

私营企业 

See also “Manufacturing economic organizations – urban” 

Retirement age workers who have been rehired or who have continued working 

-- pinyong, liuyong de li tuixiu renyuan 

 聘用,留用的离退休人员

Rural ─ xiangcun nongcun See also “Urban and rural” 

 乡村 农村 

 

Self-employed individual or family enterprises ─ 

 see also “Individual and household enterprises” 

geti jiuye 

个体就业 

93
Social insurance payments from the work unit ─ 

danwei shehui baoxian fukuan 

单位社会保险付款

Staff and workers ─ zhigong

 职工 

Statistics ministries – see Ministries 

Temporary, provisional ─ linshi 临时 

A temporary or provisional worker in a city enterprise has worked at that 

enterprise for less than one year. 

Total wage ─ gongzi zong’e 

工资总额 

Total wage bill, wages and related income ─ gongzi ji gongzixing shouru 

工资及工资性收入 

Towns ─ zhen 镇 

TVEs ─ village and town enterprises 

 xiangzhen qiye 

 乡镇企业

Often called “township and village enterprises,” the TVEs were originally 

established as collective economic units run by local governments in rural areas 

and towns. The purpose of TVEs was and is to employ rural peasants outside 

of agriculture in industrial or service occupations, and in locations not far from 

their village family homes. This allows modernization of China’s vast 

94
countryside without necessitating massive migration from the villages to cities. 

In the 1980s and especially the 1990s to today, TVEs shifted from public 

toward private ownership, and many foreign-funded enterprises became 

classified as TVEs. Now the TVE category, in addition to including small 

local enterprises, can also include very large factories in industrial parks outside 

cities, as well as suburban, town, and rural factories. Companies have incentives 

to have their factories classified as TVEs, because required social insurance 

payments are very low, statistical reporting requirements are minimal, and there 

are many legal and taxation benefits. 

Unemployment insurance fund ─ shiye baoxian 

失业保险 

Unemployment rate: shiye lu 失业率

The calculation of the unemployment rate in China is non-standard. The rural 

unemployed are completely ignored in the calculation. China’s 

unemployment rate is based on city data only and does not include the 

unemployed in towns that have been established as urban places. The figure 

used in the numerator for calculating the unemployment rate is so-called “urban 

registered unemployment.” 

 chengzhen dengji shiye 城镇登记失业

These are adults living in cities whose permanent population registration 

(hukou) is located in that city where they live, who are in the legal working 

ages of 16-59 for men and 16-54 for female white-collar workers and 16-49 

for female blue-collar workers, and who are formally registered as 

unemployed. “Urban registered unemployment” does not include laid-off 

workers who are still associated in any formal way with their former work unit, 

and does not include workers who have been forced to retire early, and does 

not include in-migrants whose permanent population registration is outside 

that city. 

The denominator of the unemployment rate is the sum of employed workers in 

legal working ages whose permanent population registration is in the city where 

they live plus the urban registered unemployed. 

 

95
Urban ─ chengzhen See also “Urban and rural” 

 城镇 

 

Urban and rural – chengzhen and xiangcun nongcun 

城镇 乡村 农村

The terms “urban” and “rural” are defined differently in China depending on the 

source of statistics. At all times, the city districts of cities are classified as 

urban, while villages are classified as rural. The differences are in how towns 

are classified, and how suburban districts around cities are classified. For 

population and housing censuses, NBS defines cities, their suburban districts, 

and all towns that have been established as urban places as “urban,” while the 

rest of the country is called “rural.” But in administrative data, other ministries 

use a narrow definition of “urban” that includes only city districts and perhaps 

some close peri-urban areas and maybe the town that serves as the 

administrative center of each county; the large residual is all designated “rural.” 

Statistical sources and publications usually use the terms “urban” and “rural” 

without ever defining them, so users have to infer what definitions are being

used in that statistics volume, and sometimes even for each individual table in a 

volume of statistics. 

Urban manufacturing staff and workers ─ 

chengzhen zhizaoye zhigong 

城镇制造业职工 

Wages ─ gongzi 

 工资 

96
Welfare fund ─ fuli feiyong or fuli fei 

福利费用 or 福利费 

The fuli fei is a fund that is supposed to be set up and used by enterprises to 

benefit employees. The fund can pay costs of a common worker space for 

leisure use, such as a gym, or where employees can buy foods and other 

needed items. Expenses of a labor union or of labor representatives could be 

covered by the welfare fund. This fund also pays for employees to go visit 

their parents or spouse if these close relatives live in a different place. The 

fund covers funeral expenses if an employee dies. The fuli fei also gives 

money to employees in financial difficulty due to big medical expenses, and 

may be used to give subsistence payments to laid-off workers or those on 

long-term leave for health reasons or to the spouse of a deceased employee. 

The welfare fund can also pay medical expenses for retirees. It can be used 

to pay monthly subsidies to couples with one child who have signed the 

one-child certificate agreeing to have only one child. A typical use for the 

fuli fei fund is to pay for outings, parties, ceremonies, or gifts to all employees. 

The fund may also be used to help purchase, maintain, and repair worker 

dormitory housing. The fund can also pay for special food subsidies. Even 

though, in theory, some of these expenses are supposed to be reported as part 

of the wage, employers and employees generally prefer not to include them as 

wage, but rather to pay for them from the welfare fund. 

Workers’ compensation fund ─ gongshang baoxian 

 工伤保险 

Workers whose population registration is in rural areas ─ 

hukou zai nongcun de renyuan 

户口在农村的人员 

Workforce, workers, employed workers ─ congye renyuan 

从业人员

See also “Employed, employment” and “Employed workers, employees” 

97
Yangtze River ─ changjiang

长江 

Yangtze River Delta ─ changjiang sanjiaozhou or changsanjiao 

长江三角洲 or 长三角

Yearend number of workers ─ nianmo renshu 

年末人数 

98