Unemployment in China: the main reasons

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:39

The problem of unemployment is relevant for many countries. The growth of the world's population, combined with scientific and technological progress, leads to an oversupply in the labor market. People themselves are becoming more demanding in terms of working conditions and wages. As a result, it is more profitable for companies to move their production to low-income countries. This allows you to save on wages. But at the same time, unemployment is rising. China is one of the clearest examples of this.

Why China?

China has a huge population and a rapidly rising standard of living. The constant growth of mechanization and automation of labor leads to the fact that fewer workers are required. As a result, many people are out of work. The only way to somehow compensate for this imbalance is to constantly increase the production of final products. In China, new enterprises are opening all the time and a bunch of unnecessary things are being produced, which sooner or laterend up in landfills. This allows you to maintain employment, but leads to excessive consumption of resources and environmental problems.

Despite the signing of the Paris climate agreement by this country, emissions of harmful substances continue to grow. And the authorities of this country are not in a hurry to limit the birth rate. The result is high dependence on other countries (including the US) and a variety of environmental problems.

What is China

This is a huge country located in the east of Asia. One of the largest in terms of area and population in the world. Since 2014, it has become a leader in terms of economic volume, and since then the gap from other countries has only been growing. The country's GDP is also growing rapidly - by an average of 6-8% per year. This is achieved by a gigantic volume of production and the development of high-tech industries. China is one of the leaders in the field of high technologies. The share of agriculture in total GDP is gradually decreasing. China ranks first in the world in terms of exports. It accounts for 4/5 of the state's foreign exchange earnings. Most of all Chinese products are sent to the USA, Japan, Western Europe.

The structure of exports used to be dominated by low-tech goods: clothes, shoes, toys, etc. But in recent years, the country has become one of the leaders in the export of electronics and vehicles.

China's unemployment rate

Thanks to the constant increase in production, the country's authorities manage to contain unemployment and prevent its excessive growth. However, information on Chinese unemployment is rather limited. The official rate is only 4.1%, which speaks of economic growth and the stability of the employment situation. In March of this year, the figures were higher - 5.3%. This was due to a decrease in product exports due to strained relations with the United States. Another reason could be low domestic demand for cars. However, this is still quite a low value for such an overpopulated country. Such figures can only be obtained in conditions of rapid GDP growth. In 2018, it was lower - 6.6%. This is the lowest figure in the last 28 years. But GDP data is still preliminary and may be adjusted upwards.

If, for example, GDP stops growing, this will lead to a sharp increase in unemployment in China. Obviously, GDP cannot grow indefinitely without environmental consequences. Sooner or later, the country will face a choice between rising unemployment and environmental disaster.

Causes of unemployment

When calculating unemployment statistics in China, there is no single and consistent methodology. In addition, they are held only in cities. Official data do not take into account the so-called hidden unemployment. Therefore, researchers believe that its real level in the country can be much higher - from 8.1 to 20% (according to data from different centers). This means that the unemployment rate in China is several times higher than official data.

Due to economic difficulties in industries, many may be subject to layoffs, howeverofficially they are considered working. Particularly high is the proportion of unemployed among the poorly educated population and young people. To keep the problem in check, the authorities are trying to keep even unprofitable enterprises afloat. Otherwise, the state is forced to pay benefits. This problem is especially relevant for the north of the country.

Decrease in the number of workers is inevitable for China's agricultural sector. The growth of mechanization and the reduction of sown areas reduce the need for labor. However, this sector involves a huge number of people in the country. As a result, the problem of unemployment is growing. The mass closure of coal and metallurgical industries also affects its level. At the same time, alternative energy jobs are growing.

In pursuit of cheaper labor, many industrial companies move production to the poorer countries of Asia: India, Vietnam, countries of Southeast Asia. As a result, some Chinese workers are left without work.

Possible consequences for our country

Being on the border with this huge power, Russia is highly dependent on the processes that are taking place there. Many are concerned about such a phenomenon as Chinese migration. The more unemployment in China, the more people leave there for neighboring countries, including Russia and Kazakhstan. Moreover, the latter actually agrees to the legal placement of residents from China on its territory, being economically dependent on it. Every year the problem becomes more acute.

Possible decline inthe Chinese economy may reduce the export of our products to China, which will also become a negative factor for our country.