China, facing global ire for its handling of the coronavirus pandemic, is now bracing itself for another tall challenge at home—rapidly rising unemployment.
Reports suggest that millions of Chinese have already lost their jobs with over 2.4 lakh companies already filing for bankruptcy in the first two months of this year. The situation will not improve in the near future. Consequently, there could be further job cuts as the economy might take more time to recover with dwindling export orders and weak domestic demand.
According to official data, the urban unemployment rate in April rose to 6 per cent from 5.9 per cent in March. In February, it was 6.2 per cent. The data do not capture the unemployment rate of those engaged in construction jobs or are living in the rural areas.
Typically, China needs to create about 15 million jobs every year. Last year, jobs were not enough to place about 8 million people who graduated and joined the workforce.
Sources said that the actual unemployment rate, at present, could be much higher than the official figures. “It is difficult to assess the actual situation as there are chances that the numbers could be much higher,” an analyst who did not wish to be named told IN. China’s economy has been witnessing rough weather for the last couple of year, primarily due to mounting tensions with the US and the impact of the trade war between the two countries.
CNN Business quoted Willy Lam, professor for the Center of China Studies at the Chinese University of Hong Kong, as saying, “China's unemployment could be seriously understated… It's unusual they are willing to report that bad data. Given the government often massages the figures, the real situation must be worse.”
While China is hoping to have a sharp recovery, sources said that the future is laced with uncertainty for the country as it has come under global scrutiny for its role in the spread of the novel coronavirus.
China registered a GDP growth rate of 6.1 per cent in 2019—the worst in over two decades. This year, the world’s second largest economy, though is not likely to slip into the negative territory, may register the lowest growth rate of in about four to five decades. In the first quarter of the current year, China’s economy declined by declined to 6.8 per cent for the first time since 1992 – the year when it started recording quarterly growth figures..