China Faces Uphill Battle to Create Jobs amid Faste Economic Growth

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Last updated at: (Beijing Time) Tuesday, August 26, 2003

China Faces Uphill Battle to Create Jobs amid Faste Economic Growth

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Though China has maintained an annual economic growth rate between 7 and 8 percent during recent years, the problem of creating enough employment opportunities still remains a hard nut for China to crack.

The current unemployment rate registered in China's rural areas has risen to 4.2 percent from 3.1 percent at the end of 2001, according to the latest statistics released by the National Bureau of Statistics.

The fueling of the labor market by the strong economic growth had diminished in the 1990s from the 1980s, when one percentage point of economic growth would create 2.4 million new jobs, compared to 700,000 new jobs for every one percentage point economic growth in the 1990s.

Analysts say the rise of the unemployment rate is inevitable in the wake of efforts by a great number of state-owned enterprises to improve their efficiency through streamlining their staff.

"This will inevitably lead to the decrease of job opportunities," said Mo Rong, deputy director of the Labor Science Research Institute of the Ministry of Labor and Social Security.

"This is because state-owned enterprises absorbed the maximum amount of labor in the old planned economy era," Mo said.

According to the ministry's statistics, more than 26 million workers were laid off from state-owned enterprises from 1998 to 2002, many of whom are still jobless.

Technological renovation and industrial upgrading are essential as China has entered a "pivotal period" in restructuring its economy, said Lu Zhongyuan, director of the macroeconomics research department of the Development Research Center of the State Council, China's cabinet.

Lu said such "structural" unemployment is unavoidable, as labor moves from the agriculture sector to manufacturing industries, which are more technology- and capital- intensive.

"A deeper-seated reason is the population growth in the world'smost populous nation," Lu said, adding that many employment opportunities are offset by the mass population growth.

"Some 24 million more jobs are needed this year, to absorb the new labor force," Lu said.

"It will take another generation for China to slow down its population growth," he added," and the employment pressure won't be alleviated within 20 to 30 years."

Observers say the small proportion of the services industry, which provides a great number of job opportunities, in China's national economy has also added to the pressure on the labor market.

The services industry accounts for only 27 percent of China's current economy, compared with more than 70 percent in the United States and over 40 percent in countries like Malaysia and India.

Economists say China has failed to provide enough support to labor-intensive industries, which are essential for creating job opportunities, in recent years.

"China should work much harder to develop labor-intensive and small- and medium-sized companies to solve the unemployment problem," said Zhou Tianyong, deputy director of Economy Research Institute of the Party School of the Communist Party of China's Central Committee.

Earlier this month, President Hu Jintao admitted at a national re-employment symposium that China still faces a relatively grave employment situation now and for a long period to come.

"Yet China also possesses a number of favorable conditions to tackle the employment issue, including sustained rapid economic growth, boosting the restructuring of certain sectors of the economy and creating various pro-employment policies," Hu said.

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