Apprehension and uncertainty have gripped a large number of Chinese even as the country posted an economic growth of 3.2 per cent in the second quarter of this calendar year. Reason? Rise in unemployment rate and uncertain export markets.
Besides, imminent financial stress is arising from big-ticket restructuring of loan repayments due from several countries under the Belt and Road Initiative. The dragon nation’s unemployment rate in June clocked a worrying 5.7 per cent, though it was a tad better compared to 5.9 per cent recorded in May and 6.2 per cent in April.
However, this is a reflection of unemployment in urban areas and does not capture data from the hinterland, where millions are dependent on the unorganized sector. If the unorganized sector is taken into account, the figure could well be in double digits.
The situation may not improve significantly despite China’s return to the positive growth trajectory in the April-June period after its economy contracted by 6.8 per cent in the first quarter of 2020.
China’s main pillar of economic growth—the exports sector—is facing unprecedented uncertainty with an ongoing trade war with the US while demand from the European markets has fallen drastically due to the coronavirus-induced economic slowdown. Further, India, one of its major export markets, has also imposed several restrictions on Chinese imports.
A Reuters poll showed that the dragon’s July exports are expected to drop once again after registering a growth of 0.5 per cent in June.
Experts said that the worst impacted are the migrant laborers who are primarily employed in the unorganized sector. Thousands of migrant workers have had to return to their native places due to job loss.
“The plight of the migrant laborers is what China needs to be worried about. The number is large and the employment data do not capture the full picture. It should not surprise us if the figure is much higher than what is officially being projected,” said an analyst on condition of anonymity.
As per data, China had about 290.7 million migrant workers in 2019.
In 2013, China overtook the US as the world’s largest trading nation. The country’s export value of goods hit a record high of about $2 trillion. The US is China’s biggest trade partner. About 20 per cent of its total export basket is directed towards the US.
Typically, China needs to create over 15 million jobs every year..