China facing rising unemployment

Rising production costs (higher wages, costlier raw materials, and higher interests) and the world’s economic crisis, which has reduced foreign demand for Chinese goods, are causing the closure or displacement of tens of thousands of plants and raising unemployment. This in turn has created “operational difficulties in some export-oriented companies and job losses,” said Yin Chengji, a spokesman for the Ministry of Human Resources and Social Security.

Ministry figures show the unemployment rate in the first three quarters at a steady 4 per cent—with 8.3 million people in urban areas registered as unemployed.

However, analysts have long criticised urban-registered unemployment as failing to accurately reflect the mainland’s full unemployment picture since most rural migrants working in cities are not included.

Beijing has reacted to the situation by introducing credit support to export companies and raised rebates for export tax.

Now, according to spokesman Yin, the ministry is expected to jack up support for labour-intensive companies, small and medium-sized companies, private companies and the service sector in order to maintain employment levels.

Factories in the Pearl River Delta and Yangtze River Delta, which are the most affected by the slump in exports, are likely to benefit the most from such measures.

Rural policymaker Chen Xiwen told the South China Morning Post that the mainland is helping factories in Guangdong to pay laid-off workers to prevent social unrest caused by massive layoffs. This way, he said, the mainland had created 9.36 million jobs in the first three quarters of the year and helped another 4.09 million laid-off workers to find new jobs.

Shenzhen’s Baoan district alone has partly spent a 100 million yuan compensation fund it set up for workers laid off by enterprises that have collapsed during the current economic downturn,

Vice Premier Li Keqiang yesterday announced measures to increase domestic demand and consumption, including massive reconstruction work (US$ 146 billion) in earthquake-hit Sichuan and in other less-developed regions of western China.

Banks, which have also been struggling because of the difficulties faced by many companies, had a total of 1.27 trillion yuan (US$ 186 billion) of non-performing loans as of 30 September.

A report commissioned by Greenpeace and written by mainland economists has revealed that the true cost of coal, which meets 70 per cent of the country’s energy needs, was much higher than officially reported; about 1.75 trillion yuan, nearly 7.1 per cent of gross domestic product that year. The figure would be even higher if the impact on the environment and health were included.

The experts who authored the report looked at so-called external costs like air and water pollution, ecological degradation, increasing health costs, mining accidents and infrastructure damage.

“Currently these costs are paid by the people in China suffering from the damage,’ said Mao Yushi, a co-author of the report, people like miners who are often without any insurance.

The report added that its figures do not include the impact of climate change. (PB)