A shortage of workers pushed up the average wage last year by nearly 15 percent, according to the latest report by the People's Bank of China (PBOC), the central bank.
Some researchers also attribute the rise to tougher competition for workers between domestic and foreign companies.
The PBOC report, released on Friday, showed an annualized increase of 14.8 percent in the nation's general wage level in 2005.
Urban workers earned on average 18,400 yuan (US$2,300) in 2005, as compared to 16,024 yuan (US$2,003) in the previous year, an increase of more than 14 percent.
Central China saw the highest growth rate at around 18 percent, although wages in the region are traditionally lower than most other places. The region's average wage was 14,800 yuan (US$1,850) in 2005.
In contrast, workers in more developed eastern regions earned an average of 22,400 yuan (US$2,800), higher than any other region on the Chinese mainland in 2005, although the growth rate was 12.3 percent.
Salaries in western and northeastern parts of the country were 15,700 yuan (US$1,960) and 15,600 yuan (US$1,950) respectively.
However, researchers found wage increases occurred mainly in the State sector and in foreign companies, while in the private sector wage rises were not widespread.
"Employees of central government institutions received the biggest wage increase, by up to 20 percent," said Liu Junsheng, a researcher with the Labour-Wage Institute under the Ministry of Labour and Social Security.
"The growth rate there was even higher than in foreign companies," he added.
Wage growth in foreign companies was between 16 and 17 percent in 2005, the second highest wage increase in China.
But Liu warned that other workers, especially migrant workers in the private sector, are still poorly paid.
He cited documents from his institute that showed in the manufacturing sector, wage increases lagged behind GDP growth by 5 percentage points every year between 1998 and 2003.
Some factories have not given a pay raise to their workers for four to five years.
In contrast, employees of State-owned enterprises, government organizations and publicly-funded institutions have seen continual income increases.
The latest statistics from National Bureau of Statistics indicate the average income for people working in the State sector rose by 16 percent year on year for the first quarter of this year.
At the same time, foreign companies based in China are feeling the pinch.
"We foreign companies have been increasingly losing our advantage as our Chinese competitors can now compete with us by paying higher wages," said James Jao, chief executive officer of J.A.O. Design International Architects & Planners Ltd.
An architect was paid 8,000 yuan (US$1,000) a month three years ago, but now he can get 20,000 yuan (US$2,500), said Jao.
(China Daily May 27, 2006)
