Economic shifts, cost considerations and evolving market demands are creating major changes on the salary dynamics of industries across China. These factors play a pivotal role in shaping the remuneration landscape, thus influencing the strategy of businesses on their compensation structures.
Economic slowdown and market forces affect salary trends
Salary increase rates across industries in China are projected to change from last year due to an unstable economy and cost control pressures from organisations in the country. In the 2025 WTW Salary Budget Planning Report survey, 40.5% of companies that participated cited anticipated economic slowdowns as a key reason for altering their salary increase budgets from last year, while 36.3% pointed to cost management challenges.
Salary trends vary across different Chinese industries
The overall salary increase rate in China is expected to be at 4.3% in 2025, a moderate drop from 5% in 2024 (Figure 1). Salary increase rates across different industries vary, however, reflecting unique industry dynamics and external pressures.
- Automotive sector: The industry’s salary increase rate slightly dropped from 3.5% in 2024 and is projected to remain at 3.2% through 2026. The sector's transition from combustion engines to smart vehicles has moderated salary increases, as the shift has required phasing out many traditional roles or drove organisations to restructure. Although investment is being made to roles related to electric vehicles, battery technology and automotive software, automotive businesses are cautious on workforce expansion due to the oversaturation of electric vehicle brands in the market.
- Biopharma and Life Sciences: The salary increase rate in the Biopharma and Life Sciences sector has tempered from 5.4% in 2024 to 5% in 2025. Strong government support in biologics, gene and cell therapies and other innovation areas has helped maintain steady salary increases in the industry. However, policies such as the Marketing Authorization Holder system and China’s centralized drug procurement system are leading organisations in this sector to restructure and optimize the headcount of their sales teams.
- Consumer and Retail: Salary increase has declined to 4.7% in 2025 from 5% in the prior year, due to various outcomes across subsectors. Demand remains strong for beauty and designer goods, due to Gen Z and Millennial consumers who prioritize experiences, particularly from brands that elicit emotions. However, the market for essential goods such as household staples and basic goods is dropping due to consumer sensitivity, coupled with the inflation of raw materials and cost pressures from logistics. As such, some companies only provide 2% to 3% of merit salary increases, or limit salary increases to only 20% to 30% of key talent.
- Financial Institutions: Salary increase rate within financial institutions dropped from 4% last year to 2.9% in 2025 and could possibly fall further to 2.5% by 2026. This is driven by mounting regulatory scrutiny and shifting business models to wealth management, which is prompting restructuring and headcount efficiency initiatives. Minimal movement in base pay can mostly be seen in roles within large state-owned banks and insurers. However, salaries within lending and credit platforms are projected to have a 6.8% growth due to risk technology stacks and scenario-specific monetization models.
- Tech, Media and Gaming: While the overall salary increase rate has dropped below 5% in 2025, roles within core subsectors such as semiconductor and internet services are expected to see a salary increase rate of more than 5.5% driven by competition for talent. Companies are actively investing in developing self-reliant tech stacks, which is increasing the demand for AI, chip design and system architecture roles. There is also a variation when it comes to premium allocation, where core research & development roles are given priority than support and non-tech roles. While 78% of employees on average are included in salary increase plans, double-digit increases are rewarded to high performers, reflecting performance-based salary budgeting.
Attrition rates and workforce management
Voluntary attrition rates have decreased from 2023 to 2025 (Figure 2), indicating employees' preference for job security amid uncertain times.
In 2024, however, there was a spike in involuntary attrition, showing that exits were mostly caused by company actions rather than employee decisions. In industries like Biopharma and Life Sciences, voluntary attrition remains relatively high at 9%. Nevertheless, the overall attrition rate in 2025 remains below 9% across industries, demonstrating a manageable level of workforce turnover that still requires proactive retention strategies.
Starting salary insights
Apart from retention, it is also important to look at talent attraction trends, particularly the starting salary policies of organisations. The WTW 2025 Salary Budget Planning Survey has found that more than half (54%) of participating companies have raised or are planning to raise starting salary ranges for 2026 graduates. The majority (82%) of companies plan to offer starting pay based on educational attainment. Candidates with a master’s degree tend to have an average of 17% of salary premium compared to those who only have a bachelor’s degree, according to our General Industry Compensation Report.
Furthermore, starting salaries tend to be higher for digital and AI-related roles as compared to other roles, highlighting the soaring demand for digital talent.
Strategic preparations for 2026
As businesses start setting their budgets for 2026, it is crucial to understand and leverage the evolving salary dynamics of your market. Identifying the current trends and their impact on pay can help organisations become more strategic in preparing their salary budget. Our recent survey reveals that more than half (66%) of companies have taken or were planning to make changes to their compensation programs to be more competitive in the talent market.
Therefore, being able to check how your peers are responding to the latest market developments can help you formulate decisions toward developing a competitive compensation program that would help achieve your business objectives. Through comprehensive compensation data, your organisation will be able to be strategic and proactive in developing a compensation strategy that adapts to the latest market trends while driving the attraction and retention of critical talent.
