China’s Economic Imbalance Forces Wage Cuts, Delayed Payments, and Side Gigs Among Struggling Workers

BEIJING / SHANGHAI — July 16: As China's economy registers headline growth, a different story is playing out on the ground—of stagnant wages, delayed salaries, and growing desperation among everyday workers. Employees in both state-owned enterprises and the private sector are increasingly taking on second jobs or relying on family support to stay afloat, as rising costs and falling profits erode incomes.

Zhang Jinming, a 30-year-old employee at a state-owned real estate firm in West Virginia, earns 4,200 yuan ($585) a month—down 24% from the 5,500 yuan he made previously. To make ends meet, he now spends three hours each evening and his weekends delivering food, earning an additional 60 to 70 yuan per shift. The additional work is both physically draining and socially uncomfortable. “Being a part-time delivery person while working for a state-owned enterprise isn't exactly considered respectable,” he told reporters. “The pay cut has put me under huge pressure.”

Zhang's situation is not unique. While China's economy posted a robust 5.2% GDP growth in the second quarter, much of it was driven by export-heavy sectors buoyed by manufacturing activity. Beneath that resilience, however, deep structural imbalances are straining household incomes.

Many companies—particularly in export-oriented sectors like autos and electronics—are facing rising input costs, delayed payments, and shrinking profit margins, leading to wage cuts, mass resignations, and rising non-performing loans. Local governments, heavily indebted and under pressure to keep factories running, have resorted to aggressive cost-cutting in public institutions as well.

Delayed Salaries in Education and Beyond

In Guangxi province, Frank Huang, a 28-year-old schoolteacher in the border city of Chongzuo, said he hasn’t received his monthly salary—typically 5,000 yuan—in over two months. “I can only endure,” he said. “If I were married with a mortgage and child, the pressure would be unimaginable.”

Another educator from Linquan County in Anhui Province, who requested to be identified by her surname Yun, said she is only receiving her base salary of 3,000 yuan. The performance-related portion, about 16% of her pay, has been “consistently delayed.” After covering essential expenses like fuel and property management fees, she is often left with barely enough for groceries. “I feel like begging,” she said. “If it weren’t for my parents, I would starve.”

Liquidity Stress and Rising Arrears

There is no official data on payment delays in the government sector, but growing arrears in state-linked industries provide clues. According to official figures through May, overdue payments in China’s computer and electronics sector rose 16.6% year-on-year, while the auto manufacturing industry saw an 11.2% increase—both outpacing the industrial average of 9%. The water and gas sectors, directly controlled by local governments, reported arrears rising by 17.1% and 11.1%, respectively.

“These figures suggest mounting liquidity stress,” said Minxiong Liao, senior economist at GlobalData.TS Lombard APAC. “They are a side effect of policymakers continuing to prioritize supply-side industrial output over domestic demand.”

A "Dual-Speed" Economy

Economists describe China’s current trajectory as that of a “dual-speed economy,” with manufacturing and exports outpacing domestic consumption. Max Zenglein, Asia-Pacific senior economist at the Conference Board, warned that “continued capacity expansion in the manufacturing and technology sectors” is exacerbating deflationary pressures and weakening consumer demand.

“What’s unfolding now is the trade war coming back home as a domestic issue,” Zenglein said.

Deflationary Fears and Consumer Retrenchment

Beijing has pledged to stimulate domestic consumption as part of its long-term rebalancing strategy, but that goal remains elusive. With real incomes under pressure and consumer sentiment weakened, spending is increasingly being deferred.

Huang Tingting, a 20-year-old waitress from Jiangsu province—an export powerhouse—quit her job after her restaurant introduced four unpaid leave days per month. “I still have to pay rent and live my life,” she said. Once able to find another service job in a matter of days, she’s now been unemployed since June.

“The job market this year is worse than last year,” she said. One position she applied for had over ten other candidates.

Policy Crossroads Ahead

As China enters the second half of the year, pressure is mounting on policymakers to shift focus from export support to household relief. Economists continue to urge structural reforms to strengthen the consumer economy, including increased investment in education, healthcare, and welfare systems.

Without such shifts, experts warn, growth may continue—but in an increasingly unequal and fragile fashion.