Reuters recently reported that China has announced that it will respond to the pressure of having many million unemployed citizens with an “employment first” strategy. The idea will be to put these unemployed people to work, and that job of finding employment will be made more difficult because there will be millions of new college graduates needing work this spring.
Right now in China, there are 9.7 million people who have registered as unemployed. That number, coupled with an expected 8.2 million new college graduates, and prospects seem intimidating. This happens at a time when China is moving toward cutting back on its industrial capacity to reduce at least some of its massive carbon footprint, meaning that there are or soon will be fewer jobs in coal mining industries, and perhaps some construction jobs.
As though more than 17 million unemployed people in a changing economy isn’t enough, many analysts say that the number of unemployed in China may be much greater as the current statistics only evaluate what is happening in more urban centers. They hope that they can encourage job creation, as well as more graduates working to create some of their own jobs to alleviate the unemployment
Although there is a government economic goal to open up more trade with more trade partners, the state is also encouraging the unemployed to look for more jobs in both technology and entrepreneurship — which presumably would create fewer goods for either national or international trade. If the government can follow through and support this sort of job growth, this could be good news for other members of the global economy. Other countries will have fewer, lower cost items from China for local goods to compete against.
The average Chinese worker has a $15,400 per capita income, compared to over $57,000 for an average American. This means the standard of living is cheaper in China, therefore they can make things that cost less, and when they are traded or sold to other countries, they can charge less, undermining the country that receives the goods as their citizens are more likely to buy the cheaper Chines goods.
Over the past few decades, China has worked to improve its infrastructure. There are thousands, if not millions of added miles of train tracks. There are canals for chips and boats. There are landing strips and airports all over the country to improve access to those places. Improved transportation infrastructure, combined with city building meant that many Chinese were employed in building, but it also meant that China was one of the most polluted countries in the world.
Much like India is learning now, development is difficult to accomplish without creating a large amount of pollution. However, China has, over the past few years, dedicated itself to improving its air quality and water quality. This could limit some of the jobs that might be available for some of the unemployed in the country. Ten years ago, many of the unemployed could have gone to a coal mine, or some other kind of mine, and gotten fast work. Or, those people could have gotten jobs building dams, railroads, airports, or skyscrapers in one of the many, growing cities that range across the country. Now, the challenge to find employment for these people is becoming more difficult.
One problem that the Chinese economy has faced is a lack of money being pumped into the economy by those who are employed. Even with 9.7% current unemployment, at least until college graduation, the unemployment rate in China is less than 4%. However, because there has been little funding from the government meant to help unemployed people, elderly people, poor people in general, those people working have had to save money for those things themselves. That means less money is infused into the economy purchasing things.
The largest growing economy is facing a real conundrum. They have more than 1.3 billion people. They are facing more than 18 million unemployed people in the urban areas alone. They are trying to get pollution under control. People are being forced to save money for their own emergencies—health, unemployment, other problems—which means they are not spending as much money on “things” as they would like. If the largest economy in the world isn ’t buying a lot of “things”, then there is less need for people to make those things. The cycle is both complicated and at least for the Chinese economy, somewhat frightening.
Regards,
Ethan Warrick
Editor
Wealth Authority
