China's Bold Wage Boost: A Stimulus for the Economy

China has unexpectedly increased wages for millions of government workers to boost consumption amid economic slowdown. The wage hikes, first time since 2015, aim to generate economic stimulus. The move, which varies by province, reflects Beijing's strategy to encourage spending despite fiscal challenges.

China's government workers received unexpected pay increases this week as Beijing intensifies efforts to stimulate a slowing economy. Sources revealed to Reuters that this wage boost could inject $12 to $20 billion into the economy if all 48 million public-sector employees benefit.

This marks the first national pay raise since 2015, when China increased civil servant salaries to curb corruption and enhance consumer spending. The State Council Information Office has not commented on this move, reported as average monthly raises of 500 yuan for many workers.

Some government employees experienced backdated increases, resembling bonus payments, particularly those in sectors like education and policing. Despite uncertainty over funding, this action aligns with China's broader strategy, including a higher budget deficit to achieve GDP growth targets, amid ongoing economic challenges.

(With inputs from agencies.)