China’s Ministry of Agriculture and Rural Affairs (MARA) recently announced that about 40 million rural residents, including those that have moved back home from cities, are starting up new businesses. However, some experts question the data and believe that the authorities are trying to conceal the fact that millions are unemployed in the the country’s rural areas.
The report claims that “8.5 million rural residents have returned to their hometowns to start a new business, and the number of stay-at-home residents who are starting a new business, or are on their way of becoming an entrepreneur, has reached 31 million.”
Some China experts and netizens believe Chinese authorities are trying to conceal the grim situation of the country’s job market.
In the MARA report, netizens observe that authorities have come up with terms to describe different scenarios of unemployment so it doesn’t have a negative connotation. The “roughly 8.5 million rural residents who have returned to their hometowns to start a new business” implies mass layoffs—these migrant workers have lost their jobs in the city and have no choice but to go back home to wait for other opportunities. The “31 million stay-at-home residents who are starting a new business” refers to rural residents who have stopped engaging in farm work and may not even be actively searching for other forms of employment.
Nowadays, even some well-known private enterprises are struggling to survive amid the economic downturn. So how is it possible for these rural residents to create a profitable new business in the remote countryside without sufficient funds and marketing channels?
Therefore, based on the MARA report, it would be more accurate to say that about 39.5 million rural workers are currently unemployed.
Economic Slowdown and US-China Trade War
U.S.-based economic observer Qin Peng told Sound of Hope radio network on Nov. 11 that the real number of unemployed people in China is much higher than the official figure, which is 5 million. He estimated from various public data that at least 20 million Chinese citizens lost their jobs recently.
Qin pointed out that the economic slowdown combined with the impact of the U.S.-China trade war caused the unemployment rate to go up, as many supply chains have left China, taking away manufacturing jobs.
“Because of these two reasons, many analysts are paying close attention to the unemployment rate in China. However, no one trusts the official data released by the Chinese government,” Qin said.
He further explained that the official unemployment figure always hovers around 4.4 to 4.6 percent, regardless of whether China’s economy is experiencing a rapid growth or facing severe problems.
“That is why economists are skeptical of China’s official unemployment figures,” Qin said.
The Okun’s law in economics describes the relationship between GDP and unemployment, which states that “a one-point increase in the cyclical unemployment rate is associated with two percentage points of negative growth in real GDP.” According to this law, Qin estimates that the number of people who became jobless in the past year is likely between 13.5 and 27 million, as many analysts have concluded that China’s present GDP is around 3 percent.
And the unemployment situation will only get worse because foreign-funded companies continue to move out of China, Qin said.
“I am concerned that some of these unemployed people may not have enough to eat. This will lead to serious social unrest,” he said.