It was a popular phrase 20 years ago. But the days of “the iron rice bowl,” or jobs for life, have long since gone in China.
Still, buried beneath the raft of policies and the myriad of data are plans to tackle the threat of rising unemployment as the world’s second-largest economy cools.
In part, this is due to the bitter trade war with the United States, which has dragged on since the spring.
Despite a 90-day truce hammered out by US President Donald Trump and China’s head of state Xi Jinping at the Group of 20 summit in Buenos Aires on December 1, successive rounds of tit-for-tat tariffs have proved costly.
Last year’s GDP figure has yet to be released, but in December exports fell 4.4%, compared to the same period in 2017, according to the General Administration of Customs. As for imports, they dropped 7.6% in the biggest decline since July 2016.
The monthly slowdown in exports was probably due to front-loading by Chinese companies in the summer and autumn as they tried to avoid increased duties to the US.
Yet this still pushed the annual surplus with the world’s largest economy to a record $323.32 billion in 2018.
“With global growth set to cool further this year, exports will remain weak even if China can clinch a trade deal that rows back Trump’s tariffs,” Julian Evans-Pritchard, a senior China economist at Capital Economics, wrote in a note on Monday.
These factors could also seriously affect employment growth with Xinhua reporting that plans to cut the social insurance premium rate would be accelerated in a move to protect jobs.
“Enterprises with fewer or zero layoffs can take half of the previous year’s unemployment insurance premium back,” an unnamed senior ministry official was quoted by the official government news agency as saying, reiterating a policy which was rolled out by China’s cabinet, the State Council, last month.
The unemployment rate hovered around 3.8% by the end of 2018, with 13.61 million new jobs created last year, which is up 100,000 from 2017.
“[But next year,] China will face large employment pressure, with more than 15 million newly-added job-seekers in urban areas, including a record number of 8.34 million college graduates expected,” the official from the Ministry of Human Resources and Social Security said.
Again, this comes at a time when manufacturing activity has declined and consumer spending has shrunk, while smartphone shipments have posted all the wrong numbers, plunging 15.5% last year.
In a snapshot of the state of the country’s economy, the China Passenger Car Association has also reported that auto sales fell 5.8% last year to 22.35 million vehicles.
It was the first annual decline since 1990.
Naturally, these figures have sparked growing concerns that China will struggle to meet its official 2018 GDP growth target of 6.5%, fueling fears that the downturn will continue this year.
If that happens, it could trigger rising unemployment among young job seekers, which is sure to keep members of Xi’s team awake at night.
“The potential growth rate is indeed dropping. It is highly possible that the real GDP [gross domestic product] growth rate in China is already below the potential rate,” Wei Jianing, a research fellow at the Development Research Center of the powerful State Council, said. “This means unemployment will soon become an issue impacting social stability.
“This kind of threat takes different forms in different countries. Jobless young people in many Western countries wander around. But in China, most unemployed youngsters stay home and browse the internet, so any online rumors can be perilous,” he added at an academic conference on international trade and global governance at Tsinghua University last month.
Whatever happened to those “iron rice bowl” days?