Minimum Wages, Available Workforce & Individual Income Taxes For All Countries and Territories In China’s Belt & Road Initiative

Op/Ed by Chris Devonshire-Ellis

China’s Belt & Road Initiative now includes 147 countries and territories around the world that have signed up to participate in the scheme. This has resulted in a massive redevelopment and infrastructure push by Beijing, both to secure future supply lines and to develop new markets. China has been able to take this massive task on due to three major reasons:

• It possesses the worlds largest foreign exchange reserves, valued at over US$3 trillion. (By comparison, the United States is 22nd)
• China can afford to borrow money at very low rates. Via the BRI, it has been passing these rates on, together with a small mark up, to nations with poor credit ratings and who otherwise would not be able to afford development cost interest repayments.
• China (and most recipient nations) understand that the infrastructure build itself, rather than the cost, will secure future fiscal growth in trade and wealth creation.

This will, and is, creating additional development opportunities, and especially as infrastructure build reaches conclusion in many countries affiliated to the BRI. Those with completed projects will start to see this infrastructure being utilized, facilitating the development of new trade routes and new market opportunities. These may be city to city, or city to port, or cross-border, or a combination of each; there are thousands of such projects underway on a global basis. Taking advantage of that is the key element for international MNC’s to keep an eye on when looking around for opportunities. Getting involved in China’s Belt & Road Initiative is rather more than than seeking project contracts. It is looking where the opportunities lie, post-build, contributing to that wealth creation, and profiting from it.

In this article we provide details of the available work forces, minimum wage levels and the pertinent individual income tax rates in each country associated with China’s BRI. This allows global MNC’s to begin an initial assessment of where the developing opportunities are as a local cost of business exercise.

Next week we shall identify the applicable Corporate Income Tax rates, Double Tax Treaties and Free Trade Agreements that will also impact on future trade flows – again including all 147 countries and territories along the BRI.  To ensure you obtain that report, readers may obtain a complimentary subscription to Silk Road Briefing here.

Note: Minimum wages can be dependent upon location or position and may not include other mandatory payable allowances.

Income Tax rates may vary dependent upon location, region, residency, and salary progression issues. For exact details contact your professional adviser or email us at silkroad@dezshira.com

Data from the World Bank, CIA Fact Sheet, pertinent local government resources & Dezan Shra Business Intelligence Unit. 

As can be seen, China has covered a lot of bases in its Belt & Road Initiative spread. At present most, but not all of the Belt & Road infrastructure projects being built use exported Chinese labor and construction workers. This is because they can be provided on a project basis, have their wages paid by the contractual terms to the relevant Chinese SOE in foreign currency yet be paid by their employer back in China, alleviating the need for any localized individual calculations on a workforce base that often numbers into thousands. Additionally, Chinese workers are relatively well disciplined.

However, at the same time, Chinese contractors has been building relations with managers, local contractors and partnering businesses, who have access to domestic labor forces. In future years, China will be able to utilize offshore, low cost labor to facilitate trade and production at far lower cost levels than may be achievable back in the PRC. This development of a relationship with employers of workforces that themselves run to 1.4 billion in total, and the increasing influence China will have over them is a major asset for China plc and the on-going ability for it to reach its trade and supply chain needs.     

Related Reading

• China’s Belt and Road Initiative – It’s about the Trade Opportunity, Stupid
• China’s Belt and Road Initiative is Being Blamed for Sri Lanka’s Hambantota Port Problems. But the Real Story is Rather Different.