According to the Hay Group Pay Survey via Workforce.com, salary increases in China are outstripping increases in the US by a long-shot. Average pay increases in China are about 7.8% - 8.9% for professional, administrative and senior managers compared with 1.4% for their counterparts in the US.
While percentages look good the reality is that salary levels just aren't as high in China (although who knows how long it will take to reach US levels, at the current growth rates probably not that long). Even then low salary levels are not stopping many returnees from heading back to the mainland. As one China expert said to me recently, "the trend has changed, while previously Chinese students went overseas to study and stay for jobs, they are now returning immediately after graduating at foreign universities because the opportunities to move up in China are so exciting".
This has a positive and negative effect. There is no doubt that the Chinese returnees, much like India's returnees, who have extensive international experience bring a new (and very valuable) mindset to their home country. Returnees who bypass working overseas to return right after graduation will at least return with stronger foreign language skills and a wider international perspective but miss out on that valuable work experience. My advice would be to those young graduates that you challenge yourself to work overseas before you return to China. You will be a better person for it and it may make a big difference to your career. Certainly in the eyes of many recruiters it will make you stand out over many of your peers.