Economy & Tech
The Truth Behind China's Unemployment Data and Its Global Impact
A Chinese economist says that China's growing unemployment could have a disastrous impact on its citizens and far-reaching consequences on the global landscape.
China stopped releasing the youth unemployment rate in August after it soared to a record high of 21.3% in June. Since then, the world has been in the dark about the employment situation in China. But a Chinese economist's analysis has presented us with a gloomy picture: China could face a staggering situation with up to 120 million unemployed people at risk of starvation.
The following is the process of how he reached his conclusion. It is all based on official data. The math might be dry, but the findings are solid and crucial.
Two Classes of People in China: Urban Hukou and Rural Hukou
First of all, we need to understand that in China, everyone has a so-called household registration ("hukou 户口"). If one was born in a city and registered there, he or she is considered an urban household population.
If one was born in the countryside, or born in the city but his or her parents were registered in the rural population, one is still considered a rural household. Even if one works or moves to a city, he or she will always be considered a rural hukou person. That is unless he or she obtains a city hukou quota and changes his or her registration to a city hukou.
Since the Chinese Communist Party (CCP) established its regime, this household registration system has divided people into two major classes. One is either urban or rural. For many years, also, the CCP restricted the free movement of people.
This is why all official population and employment-related data are categorized into urban and rural populations.
How Does China's 'Urban Surveyed Unemployment' Rate Come About?
According to the latest official data, China's "urban surveyed unemployment rate" was 5.1%.
However, this so-called "surveyed unemployment" rate is highly unreliable. It is obtained mainly by sending surveyors to urban and rural households, including dormitories in factories and enterprises, as well as dormitories and shacks where migrant workers might gather. Then it conducts surveys among these groups of people.
This method is like asking passengers on a moving train if they were able to buy a ticket. It is completely biased and unreliable.
Two More Facts about China's Employment Figures
Another fact we need to know is that China's National Bureau of Statistics considers even working one hour per week as employment.
There is another fact about China's employment figures. For people with a rural hukou, as soon as they turn 15 years old, the government considers them adults. If they don't continue their studies, they are deemed part of the labor force and are never considered unemployed until they die. The government believes they can always farm at home, so there's never an unemployment issue for rural people.
That is why the CCP only releases the urban surveyed unemployment rate. There are no rural surveyed unemployment rates.
Therefore, to know the real situation, we have to try to work out the numbers ourselves.
Cruel Fact: 291 Million People in Rural China Rely Entirely on Migrant Workers in the Cities
According to China's National Bureau of Statistics, in 2022, China's total population was 1.41175 billion. The urban employed population was 459.31 million, the rural employed population was 274.2 million, totaling 733.51 million.
According to data from the Ministry of Public Security, the urban population ratio is 47.7%.
Based on this ratio, the urban population of China is 1.41175 billion * 47.7% = 673.4 million people.
And the rural population is 1.41175 billion - 673.4 million = 738.35 million.
According to "2022 Rural Migrant Worker Monitoring Survey Report" published by China's National Bureau of Statistics, the total number of rural migrant workers in cities is 295.62 million.
Data from China's Ministry of Land and Resources reveals that China currently has a total of 2.22 billion mu (147.7 million hectares) of arable land.
According to Chinese economist Lao Man, after deducting various expenses, one mu of land can only yield a profit of ¥1,000 CNY (Chinese yuan) ($140 USD) per year. However, the cost of living for one person is at least 10,000 yuan ($1,400 USD) per year.
This means that every 10 mu of land can barely support one person.
Therefore, 2.22 billion mu of land can only support a rural population of about 200 million.
Matching the Rural Resident Numbers to Rural People Working in Urban Areas
China's rural resident population is 491.04 million, but the land can only support 200 million people. This means that 291 million people living in rural areas must rely on the money sent by those working in the cities.
This matches exactly with the number of migrant workers currently working in the cities: 295.62 million.
In other words, every migrant worker supports one person back in the rural area. Without the migrant workers working in the cities, the 291 million people in rural areas would have had problems making a living long ago.
It's also worth mentioning that in rural areas, farmers basically have no government welfare and rely solely on family support and relief.
This leads to a very cruel reality: If one migrant worker loses his or her job in the city and can only return to the rural area, the land there cannot sustain him or her. The person who was previously supported by this worker will also have to starve.
In other words, for every lost job of a migrant worker, two people in rural areas will lose income to live on.
At Least 46 Million Unemployed in Urban Areas
Now let's look at the urban situation.
As the official "urban surveyed unemployment rate" is almost a joke, we have to work it out ourselves too.
First, we need to figure out the "working-age labor force" of the urban hukou population. That is calculated as follows:
673 million total urban hukou population - 119 million minors (people younger than 14) - 38 million high school and above students - 107 million retirees over 60 = 409 million
However, according to the National Bureau of Statistics, the urban employed population in 2022 is 459 million, which is 50 million more than this result.
This is because the 459 million urban employed population actually includes 296 million rural migrant workers. Subtracting these 296 million, the urban employed population is left with 163 million.
This 163 million is the number of formally employed people in urban areas. Formally employed can roughly be considered as having a full-time job in a "formal" workplace. For example, in state-owned enterprises and governmental institutions.
So, the unemployment rate as a percentage of the total urban working-age labor force is: (409 million - 163 million) / 409 million = 60.15%
Counting 'Flexible Employment'
This sounds unbelievably high. The reason is, as a matter of fact, in addition to "formal employment," there is another form of employment in urban areas. It is called "flexible employment" by the Chinese government.
"Flexible employment" includes delivering food, live streaming, driving for ride-sharing services, providing domestic tutoring, and working as self-media creators, among other new forms of employment in the digital age.
In Western countries, this status is usually known as self-employed.
The number of people engaged in "flexible employment" was only announced once by the head of the National Bureau of Statistics. That was during a 2021 press conference on the national economic operation. And the number is 200 million.
If we count these 200 million people as fully employed - although some of them might have very low incomes and rely on family support to survive - the total number of employed people increases to 363 million.
Therefore, the urban unemployed population would be 409 million - 363 million=46 million
And the unemployment rate would be: 46 million/409 million = 11.2%
Staggering Number: 130 Million Vulnerable Live Streamers
However, among the 200 million so-called flexibly employed, the largest group is live streamers. That is, those who make videos on platforms like TikTok to make a living.
According to data disclosed at the 2021 Live Streaming and Short Video Summit by the China Performance Industry Association, the total number of various types of live streamers in China has reached an astonishing 130 million.
In China, the scene of a large group of people doing live streaming together at a certain popular location, as shown in this video, is not rare. But it could look quite amazing to a "foreigner."
However, about 20%, or 26 million, of these streamers earn less than ￥2,000 CNY ($279 USD) per month.
"Less than ¥2,000 CNY" can be anywhere from ￥0 to ￥2000. So this group could become unemployed at any time during an economic downturn.
If these 26 million people became unemployed, the number of unemployed urban population would increase from 46 million to 72 million.
More than 2 years ago, I did a show about an "Uploader" called Mocha in China. He was a 23-year-old young video creator who died alone in his room either from starvation or sickness. Chinese people gave him the nickname "Little Match Boy" because what really killed him was property. He was a Chinese version of "The Little Match Girl" by famous Danish author Hans Andersen. And he belonged exactly to these 26 million bottom-tier streamers.
If the unemployed urban population increases to 72 million, the unemployment rate would reach 17.6% ( 72 million/409 million). That is above 15%, an economic crisis level.
126 million Starving People: Possible and Dreadful Situation for China in 2024
Another fact is that China's dual urban-rural system creates a huge gap between urban and rural hukou populations. And there are fundamental differences in healthcare, pension, and education systems. Nevertheless, there is one thing in common for urban and rural residents: Neither have any employment security.
According to Chinese economist Lao Man's calculation, China's GDP in the third quarter was between -1.6% and -2.9%. It was not the 5.2% announced by the National Bureau of Statistics.
Therefore, it is not hard at all for us to imagine a 10% decrease in employment in 2024. Especially given all the other problems, including local debt.
With a 10% decrease in employment, about 30 million migrant workers will lose their jobs. This corresponds to another 30 million rural population who rely on these 30 million migrant workers. And this will result in 60 million people facing starvation.
In the urban areas, a 10% decrease means out of the 200 million people in "flexible employment", 20 million will lose their income. As a result, the unemployed population will increase to 66 million.
60 million starving rural residents plus 66 million starving urban residents, a total of 126 million starving people. That is the possible and dreadful situation that China could face in 2024.
The Global Impact
Considering the current fiscal capability of the CCP, I don't think that it can provide any relief for these 126 million people.
What could happen under such kind of circumstances?
During his visit to the United States, Xi Jinping unexpectedly stated that the CCP does not have plans to attack Taiwan in 2027 or 2035. He claimed the world had misunderstood him.
Judging from Xi Jinping's unexpectedly big smiles during his visits to the US and Vietnam, he has temporarily given up the wolf-warrior persona to reassume the role of the giant panda. He is under pressure from China's economic downturn.
However, as one popular Chinese language analyst stated, "For the army of over a hundred million unemployed population, if you don't let them fight against the US or Japan, they will turn around to fight against the CCP."
Therefore, how will the CCP resolve the inevitable surge of unemployment and the problem of 120 million starving people?
This is indeed a very concerning issue that could also significantly impact the global landscape.
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Author: Jennifer Zeng
Find articles by Jennifer Zeng on JAPAN Forward. Follow her on X (formerly Twitter) and on her blog page, Jennifer's World.
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