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China's Unemployment Expected to Rise - 2003-02-12

Chinese state media are warning that unemployment is likely to exceed government target rates for this year. Labor unrest fueled by widespread worker layoffs is a major concern for China's leaders.

The state-run China Daily newspaper Wednesday quotes a vice-minister of labor and social security, Zhang Xiaojian, as saying that China faces "urgent" unemployment problems. The newspaper warns that unless more comprehensive measures are taken to create jobs, the jobless rate could rise above the government's target of 4.5 percent this year.

Beijing has promised to create 9.5 million new jobs this year. The China Daily, however, quotes Mr. Zhang and other experts as saying the supply of labor will "greatly overtake demand" in the coming years.

Officially, China has an urban unemployment rate of just four percent. But analysts widely believe the true jobless level to be much higher.

Andy Rothman, an economist for investment bank CLSA Emerging Markets in Beijing, said Chinese labor officials are beginning to acknowledge the severity of the unemployment problem. "The minister of labor came out and said he believed the true unemployment rate was about seven percent, and to me that sounds like an accurate estimate. It's very, very difficult to get an accurate count on this," Mr. Rothman said.

Mr. Rothman said some 30 million people have been laid off from state companies over the past five years, but many are still counted as employed because they receive nominal benefits. In addition, government statistics do not include about 150 million rural laborers with only temporary jobs, or the 100 million migrants flooding to the cities in search of work.

Widespread unemployment has led to rising unrest across China, especially in the northeast, where many inefficient state-owned factories have closed down.

Last year, tens of thousands of laid off workers took part in unprecedented protests in Liaoning Province. The government, worried about the threat to its power, arrested organizers of the demonstrations, and two have been tried for subversion.