China’s rapidly shifting economy will bring about significant changes in pay trends across all industries in 2025. The country’s projected GDP growth is slowing down from 4.8% in 2024 to 4.2% in 2025 and the inflation rate is rising to 1.2% from the previous year's 0.4%. This economic slowdown will certainly affect employee turnover and pay raises.
In the labour market, the unemployment rate is expected to decrease slightly from 3.5% in 2024 to 3.3% in 2025, indicating a relatively stable job market. Voluntary attrition rates are expected to decrease as employees focus more on job security and consider the current uncertainty in the market. However, involuntary attrition rates may increase as companies become more selective and strategic in their workforce management.
WTW research shows that salary increases will likely stay low in 2025. The average increase is expected to be 5%, which is similar to last year (Figure 1). It is important to note that this number is only applicable to companies that plan to actually increase salaries this year, as not all organisations are expected to do so. For those that plan to increase salaries, the disparity in salary budgets across different industries may widen. Key sectors that are experiencing robust growth or facing talent shortages will likely offer more generous salary adjustments, whereas others may face tighter constraints. This widening gap underscores the importance of organisations aligning their compensation strategies with industry-specific trends and market conditions.
While online sales are decreasing, retail sales are increasing in non-first-tier Chinese cities due to the increasing per capita consumption of rural residents, which is expected to surpass that of urban residents. Economic growth in these areas leads to a more dynamic retail environment and businesses will likely pay more attention to these regions.
One of the key subsectors driving this growth is food and beverage, with catering services in particular experiencing strong demand, highlighting the country’s economic growth.
In terms of salary trends, the Consumer Products and Retail (CPRT) industry may see a modest increase in salary adjustments, rising from 4.7% in 2024 to 4.9% in 2025 (Figure 2), with salaries growing faster in non-first-tier cities. Companies are increasingly recognising the importance of rewarding top performers and high-potential employees with aggressive incentives to retain talent and drive business growth. This focus on key talent is particularly crucial in regions where competition for skilled workers is intensifying. This trend will likely persist as the economic landscape in China continues to transform, emphasising the need for companies to tailor their compensation strategies to local market conditions.
The Biopharma and Life Sciences (BPLS) industry’s growth is propelled by a greater demand for healthcare services due to the country’s aging population and a growing emphasis on health in a post-pandemic world. This shift has created demand for more advanced medical treatments and innovative pharmaceuticals. Moreover, the National Medical Products Administration (NMPA) has streamlined the approval process for novel drugs, further invigorating growth and investment in the sector.
AI is also reshaping the landscape of pharmaceutical development and other essential processes. Consequently, the demand for professionals who can bridge the realms of biopharma and technology is rising as companies are investing more in AI-driven solutions.
However, the BPLS industry is not immune to the broader economic slowdown. The industry’s salary increase rate is expected to continue its moderate but steady decline from 6% in 2023 to a nearly flat 5% in 2025 (Figure 3). Entry-level positions have seen higher salary increases, reflecting the need to attract new talent. Second-tier cities have experienced a higher percentage of total guaranteed compensation (TGC) growth, as companies expand their operations to these emerging markets.
Turnover rates in the industry have also shown interesting patterns. While voluntary turnover has remained relatively stable, there has been an upward trend in involuntary turnover driven by companies’ efforts to streamline their operations and maintain financial health. This is expected to continue into 2025, as organisations become more selective in workforce management. Despite these challenges, the sector’s overall TGC and annual total compensation (ATC) have remained robust, with pharma companies leading the way in 2024. In contrast, internet medical services have experienced the lowest TGC and ATC, highlighting the varying financial health and strategic focus within the BPLS industry.
China’s renewable energy capacity has surged in the last ten years, growing tenfold and signalling a rapid shift to clean energy. This growth is based on better supply and demand, making the industry a key part of the nation’s economic and environmental goals.
Despite this remarkable growth, the energy sector faces several challenges. Traditional energy companies, particularly those in the oil and coal sectors, are grappling with renewable energy transition pressure and operational strains while competition among renewable energy companies has become more and more intensified. The workforce growth of renewable energy companies expected to enter a period of stabilization by 2025. In terms of compensation, we are seeing a moderation in salary increase rates across the energy industry from 2024 to 2025. Traditional energy companies are expected to maintain relatively stable salary adjustments, while the energy storage sector may see a decline (Figure 4). To attract and retain top talent, employers are prioritising compensation resources for key positions, particularly in sales, research and development (R&D), technology and production. These areas are crucial for innovation and maintaining a competitive edge in the market.
In the face of profit challenges, energy organisations may tend to have a more conservative approach to performance appraisals. This could mean high-performing individuals receiving lower ratings and bonus payouts might be curtailed to manage costs. This strategy is designed to strike a balance between financial prudence and the need to retain and motivate key talent in this dynamic industry.
The Tech, Media and Gaming (TMG) industry has a mix of stability and targeted growth. The median salary increase rate is expected to remain at 5% in 2025, similar to 2024 (Figure 5). But the underlying trends are more complex. Companies are adopting a more conservative approach to salary adjustments due to the broader economic slowdown. Meanwhile, there are significant variations across different subsectors and levels of employment.
The semiconductor, autonomous driving and internet of vehicles (IoV) subsectors are poised to see higher salary increase rates in 2025. These areas are experiencing intense competition for talent, particularly in the realm of AI. The demand for AI expertise is driving significant salary movements, with companies offering highly competitive packages to attract and retain top-tier professionals.
For instance, semiconductor companies, which are at the forefront of technological innovation, are likely to see salary increases above the median rate at 7%. Similarly, the autonomous driving and IoV sectors, which are crucial for the future of transportation and connectivity, are also expected to see above-average salary growth at 5.8%. Meanwhile, other parts of the TMG industry, like traditional media and gaming, are expected to follow the median salary increase rate of 5%. Even within these subsectors, companies are focusing on key roles and high-potential employees to stay ahead in the market.
Fintech firms are offering some of the most competitive salary increases in China’s financial market (Figure 6), a testament to the sector’s healthy expansion. Unlike conventional financial institutions that tend to have conservative compensation strategies, fintech companies are more inclined to invest in their workforce.
The fintech landscape in China is incredibly diverse, with each segment playing a unique role in the country’s financial evolution. Digital payments are making transactions more convenient for consumers, while lending platforms are broadening access to credit. This diversity is driving the need for specialised skills, particularly in technology. In Chinese fintech companies, nearly half of their workforce are tech specialists, and this proportion can be as high as 60% in top companies.
Fintech employers are especially prioritising the recruitment and retention of talent with expertise in AI and data analytics. Within the same job level, top-performing or highly skilled AI and data employees are earning significantly more than their counterparts in traditional IT roles. This premium on AI talent is driven by the need to enhance customer experience and improve risk management, which are crucial for the sector’s continued growth and innovation.
The highest variable pay in fintech is found in finance sales, risk management, tech sales and technology. Tech sales and tech roles have similar variable pay structures, as companies in this sector are actively encouraging tech employees to transition into front-line sales roles. Additionally, risk management compensation is rising to help organisations address the complexities of the shifting financial environment in the country.
In the evolving economic landscape of China, several key trends and observations emerge that highlight the strategic priorities of organisations across various industries. One of the most consistent themes is the targeted allocation of salary increases to core functions. Companies are placing a premium on roles that drive innovation and growth, with roles related to R&D, sales and global expansion receiving more substantial salary adjustments.
We are also seeing a growing premium on digital innovation roles. As industries across the board increasingly rely on technology, the competition for talent intensifies in areas such as AI, big data and cloud computing. Companies are willing to offer higher salaries and more attractive compensation packages to attract and retain professionals with these specialised skills. This premium is particularly evident in the fintech sector, where the demand for AI and data analytics experts is driving a significant wage gap between traditional IT roles and these cutting-edge positions.
Companies are also diversifying their retention strategies. Career growth opportunities, job security and strong manager-employee relationships are now prioritised for employee satisfaction and retention. Many organisations are implementing mentorship programmes and career development initiatives to develop Gen Z talent. These programmes are designed to provide young professionals with the skills and support they need to become high-potential employees, ensuring a steady pipeline of talent for the future.
To thrive in a dynamic and rapidly changing market, organisations in China need to stay vigilant and proactive. Regularly monitoring changes in economic policies and industry trends is crucial. For instance, the ongoing AI revolution is reshaping the way businesses operate, and influencing compensation, attraction and retention strategies. Companies that are agile and responsive to these changes will be better positioned to capitalise on emerging opportunities and address potential risks.
Invest in talent that drives success in your respective market and prioritise recruitment and retention of top performers. Take a holistic approach to employee satisfaction: go beyond higher pay and provide career growth opportunities, job security and strong manager-employee relationships, which are all increasingly important to employees.
Continuously evaluate and enhance your company’s compensation strategies using a data-driven approach. This ensures that your compensation packages are not only competitive but also tailored to your specific sector and unique business needs. WTW provides valuable data on compensation trends across various sectors in China, which can be instrumental in optimising compensation and performance management.
In this ever-changing environment, the ability to adapt and innovate will be the key differentiator for companies in China. By staying ahead of the curve on emerging trends, regularly reviewing compensation strategies and investing in key talent, companies can successfully navigate the market’s complexities and position themselves for long-term success.
