China gives civil servants first big pay rise in a decade

This move was made by Beijing to boost spending, supporting the slowing economy.

The total immediate payout could provide a boost of between $12 billion and about $20 billion to the economy if all 48 million people counted as public sector employees receive the increase as described to Reuters.

The last time China publicly raised salaries nationwide for civil servants was in 2015, when the government raised local officials' salaries by more than 30% to fight corruption and boost consumer spending.

However, the State Council Information Office, the Chinese government's mouthpiece, has not responded to Reuters' request for comment on the pay increase.

According to sources who spoke to Reuters or posted on social media, the average monthly pay increase for civil servants this time is about 500 yuan. Some lower-level officials said they received increases of nearly 300 yuan a month.

In many cases, the pay increases are retroactive to July 2024 and are paid as a one-time bonus, according to people familiar with the matter.

Mr. Xu Tianchen, senior economist at the Economist Intelligence Unit, said Beijing's strategy appeared to be aimed at encouraging consumption from people who were more willing to spend.

“We have seen cash transfers to the poor and now public sector wage increases,” he said. “Low-income groups tend to spend a larger share of their income, while public sector workers with higher levels of social security are able to spend more than private sector workers.”

The pay increase, which will apply to teachers, police officers and civil servants across China, was first reported by Bloomberg on Jan. 2. However, Beijing has not announced or detailed the move, and it is unclear how the increase will be funded or how much it will cost.

In December 2024, Chinese leaders agreed to increase the budget deficit to the equivalent of 4% of gross domestic product (GDP) by 2025, according to Reuters.

This is to support the economic growth target of around 5% in 2025, despite the impact of the prolonged real estate crisis, falling prices, and the risk of higher tariffs on exports to the US.

Civil servants began posting on social media about the pay raises before and after the New Year holiday. "If we can get rid of deflation, it will be good for everyone," wrote one Weibo user in Jiangsu province.

However, there are also criticisms. A Weibo user in Hubei asked why stimulate consumption by focusing on only a small group of civil servants?

A record 3.4 million young Chinese are expected to apply for civil service jobs in 2024, lured by job security amid pressure on the private sector. The number of applicants has tripled since 2014, even as some local governments struggle to pay salaries and even cut benefits and staff.

In Beijing, a group of city workers were informed on Jan. 2 that they would get a raise of at least 500 yuan a month, but no further details were given, a civil servant who spoke on condition of anonymity said.