Rebel Traders – Analysis Without The Hype

The terrible hits that took place the last few months on the global economy took an especially heavy toll on the emerging countries’ economies. The Chinese powerhouse namely, took a severe hit on the front of jobs, sparking hence some social tensions which we mentioned in our past chronicles.

It appeared that a universitarian research institution gave some amount of clarity on the extent of the phenomenon. The Chinese Academy of Social Sciences (CASS) revealed that, in its estimation, about 41 million persons lost their jobs due to the downturn. For those Americans who think they have been badly hit by the recession, it is worth noticing that for the CASS, 40 % of the global layoffs took place in China. For the CASS, better orienting the stimulus package could have created up to 72.36 million jobs, in contrast to the 51.35 million which could be created by the infrastructure-oriented current Chinese stimulus, as reports China’s Economic Review.

Up to 41 million workers in China have lost their jobs in the global economic downturn and 23 million remain out of work, the South China Morning Post reported, citing a report by the Chinese Academy of Social Sciences (CASS). The layoffs far exceed government estimates, CASS said. Last month the Ministry of Human Resources and Social Security said that just 16.5 million people had lost their jobs due to the downturn: 9 million urban residents, 3 million college graduates and 4.5 million rural migrant workers. Many of the layoffs were triggered by collapse of the export sector at the end of 2008. CASS estimated that approximately 40% of the global redundancies from the downturn were in China. It added that Beijing did not make employment a priority in its US$586 billion stimulus the package. The current focus on infrastructure projects is expected to create 51.35 million jobs. However, if the stimulus package was reorganized to make employment a priority, it could create up to 72.36 million jobs.

Unofficial estimates have put the current job losses in China at around 74 million, hitting mainly migrant workers. The Chinese government was on the offensive after the CASS report. Yi Weimin, the Chinese minister for Human Resources announced that 95 % of migrant workers had a job in August.

Government data shows that 95 percent of migrant workers had jobs last month, which was on par with the percentage working last year. And a recent shortage of labor in the Yangtze River Delta and Pearl River Delta areas, both economic heartlands, underlines the recovery of the economy and the creation of new jobs, the official said.

Of course, what Weimin did not say was that many migrant workers do not register in the unemployment statistics, simply because they return to the country, a situation which may trigger social unrest, a possibility to which the authorities have been alert, as incidentally confirmed by the minister:

The worst-case scenario we prepared for earlier, in which migrant workers who lost their jobs might turn up protesting, did not take place. “And college graduates are also quite stable, with sufficient employment measures in place,” the minister told.

The budding recovery relaxes a bit the pressure on the Chinese authorities, but the alert is still present. Unless there is a relapse of the US consumer into the very habits that created the crisis in the first place, the export sector on which China is strongly dependent for its job creation may not be as buoyant as in the past.