skyjuiceiswater: What is the unemployment rate in China?

25 December 2021

Video Summary

Before 2018, China was having an almost full employment rate. The unemployment rate was under 4%. Then came U.S. President DonaldTrump, slamming tariffs and other trade barriers on China in 2018 sending China's unemployment rate to 5% or more. The rate came down to about 5% after Biden took over the office in January 2021.

What the Critics Said?

The Critics are expecting more unemployment. They were of the view that China has under-estimated joblessness. They said China had not counted adequately the "149 million self-employed business owners and nearly 300 million migrant workers, who regularly travel from their rural hometowns to find employment in urban areas". This 500 million is about 75% of the Chinese total workforce of about 800 million people. The economists were claiming "The downward pressure on China’s economy has increased significantly, and the employment situation has continued to deteriorate,” But how bad is the actual unemployment?.

How Bad?

It is believed that nobody can really tell for sure. The official media has propagated about a very good outlook and a very promising future for the Chinese people. It is as if unemployment is always challenging but never a problem in China. For example, this propaganda claimed that the 2021 employment is steady and inching better with many targets completed.

The Xinhua News Agent, the official newspaper claimed that Shanghai has only 144,000 unemployment for the 1st 9 months. They intend to make Shanghai have an unemployment rate lower than the national figure of 5.5%.

How we could verify?

SCMP in that article questioning China's unemployment rate has given a hint. It said China has a Social Security Regulation (SSR), requiring employers to make contributions to the insurance schemes for each and every employee. And the Human Resources and Social Security Bureau (HRSSB) (人力资源和社会保障局) will always keep a registry and payout unemployment insurance to the worker. Therefore, it is possible to roughly gauge and judge the unemployment rate for each and every city where one can find such reports.

For example, Shanghai's HRSSB has this annual report for 2020

The report claimed that for the 1st quarter (1季度）2021, there were about 472,500 jobless claims. The projection based on this figure for the whole of 2021 will be roughly about 1.80 million jobless claims.

According to Xinhua News, Shanghai has an active workforce of around 11 million, this 1.08 million is about 1.8/11=16.4%. In other words, Shanghai could have much more than 18% unemployment in 2021 if we take into accounts the following:

1. Not many are keen to claim insurance unless they have no choice. This is because most Chinese would not like to have a record in the Bureau. It will make them difficult to find a good job in the future;

2. Many employers in the private sector tried to avoid paying the high insurance contribution whenever they can;

3. Most Chinese are afraid to claim insurance for fear of losing their "face".

What is so Alarming?

Shanghai's 1st quarter report of jobless claim numbers turned out to be 472,500 which is 157,000 or 50% more than the whole year of 2020. The report has gone viral has attracted an outcry among the netizens.

But the authorities were muted about the outcry. They made no clarification except to announce much lower jobless claim numbers in the 2nd (98,000) and 3rd quarters (184,500) as shown in the following graph. The 2nd and 3rd quarter figure brought the jobless claim figure to about 650,000 for the last 3 quarters.

The 4th and final quarterly report is not due until early 2022. If the jobless figure is about the same as the 3rd quarter of 2021, it will bring down the earlier estimated unemployment rate from 16% to roughly about 7.5%. But this 7.5% is still far higher than those figures reported by the official newspapers.

Conclusion

To understand the statistics and the economic figure better, one would often have to find other means and not rely only on those reported in the official media. The official bad figures are often downplayed by the Politicians.

Although jobless claims can be used to estimate the unemployment rate, it might not give any meaningful result if there is manipulation made purposely to lower the number of claims.

Attachment:

1. Shanghai Human Resources and Social Security Bureau (HRSSB) (人力资源和社会保障局) 1st Quarter Report 2021