Unemployment – the most unusable indicator in China?

08:12 by Hubert Fromlet, Kalmar

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Arbetslösheten – Kinas minst användbara konjunkturindikator?

Brief summary / sammanfattning

Kvaliteten i Kinas ekonomiska statistik har aldrig haft gott anseende bland flertalet utländska Kinaforskare. Tillämpningen av vettiga tidsserier har alltid varit synnerligen begränsad. Den officiellt redovisade arbetslöshetsstatistiken framstår som den kanske minst användbara konjunkturindikatorn för internationella bedömare. Arbetslöshetsstatistiken är helt enkelt inte tillräckligt omfattande.

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After having dealt with Chinese official statistics during 30 years, I still have the concrete impression that the monthly, quarterly and annually published economic numbers never could give me a feeling of applicable and comfortable accuracy (e.g. in: Finance India. The Quarterly Journal of Indian Institute of Finance, ISSN 0970-3772, Vol. 25, no 4, s. 1189-1207). Too many statistical inconsistencies could be found more or less regularly over the years. Other (academic) economists came to the same conclusion.

Referring to the corona virus, I pointed some months ago at the new opportunity for the official China to create better transparency – and by a new policy of improved openness to achieve an upgrading of its international reputation (see my article here on chinaresearch.se from April 14, 2020). And I strongly argued for the view that China itself could have benefited from such a policy change.

Unfortunately, China did not want to go for such a new direction. This also means that unemployment numbers will continue to be the same conundrum as they have been in the past decades.

Unemployment statistics covers only a limited part of the economy

Two different measurements of unemployment rates can quite easily be found in official statistics, one for 31 metropolitan cities and one for total urban unemployment http://data.stats.gov.cn/english/easyquery.htm?cn=A01. But also in this blog’s limited context show up a number of questions without good possible answers, quoting here some of them.

¤ Rural unemployment is not included in the official – survey-based – unemployment numbers. Is this a curable major shortcoming?

¤ There is no good estimate about migrant workers working occasionally in the cities, in good times according to the authorities up to 300 million people – and now may be half of it. One has to wonder where these newly unemployed people have gone in reality and in statistics?

¤ Also officially confirmed, migrant workers accounted last year for roughly one third of the Chinese labor force. Based on this number, it puzzles quite a lot that total urban unemployment in the 31 major cities merely rose from 5.3 % in July 2019 to 5.9 % in April 2020.

No clear answers to be expected

Increasing unemployment may be the most crucial issue for China’s leadership, both politically and socially (which is interconnected). For this reason, promising opening up in unemployment communication will not take room in the foreseeable future – unless the economy unexpectedly will face an explosive and sustainably strong recovery.

Who believes in such a development?

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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