Mon, Apr 13, 2020 page15

• Unemployment threatens China’s poverty targets

  • AFP, BEIJING
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  Millions of people have lost their jobs in China in the economic fallout from the COVID-19 pandemic, throwing into jeopardy an ambitious target to eradicate poverty this year.

  Beijing has been working to fire up the economy again after bringing it to a near standstill to curb the spread of COVID-19, but many firms have had a bumpy restart and workers are bearing the brunt of the pain.

  Despite being a country of skyscrapers and high-tech innovations, China still has millions of people on meager incomes.

  About 5.5 million rural Chinese live in poverty, defined by the Chinese government as surviving on less than 2,300 yuan (US$326) a year.

  A slowing economy puts pressure on a key Chinese Communist Party goal to become a “moderately prosperous society” by the end of this year, an ambition in place long before the virus emerged in its Hubei Province late last year.

  It also threatens a long-held tacit agreement between people and party that freedoms can be sacrificed in return for economic progress, an understanding that largely forms the basis of the authoritarian government’s legitimacy in the absence of elections.

  China has little in the way of social security benefits and workers who lose their jobs have an inadequate safety net, meaning mass unemployment often brings a fear of unrest.

  Official statistics show jobless numbers have soared, with roughly 5 million people added to the out-of-work number from December to February.

  Data firm Caixin (財新) said that its services purchasing managers’ index, a key indicator of activity in the services sector, showed that companies last month cut staff at the quickest pace on record.

  With much of the rest of the world still locked in all-consuming battles against the novel coronavirus, the pandemic is expected to heavily weigh on demand for Chinese goods.

  Analysts at financial services firm Nomura Holdings Inc said that China could lose about 18 million jobs in the export sector — nearly one-third of the industry’s workforce.

  This growing unemployment will be a major blow to consumption — a key driver of China’s growth, Louis Kuijs of Oxford Economics said.

  Some businesses still cannot reopen amid lingering lockdowns, while some firms have taken dramatic measures to stay solvent, including paying just a minimal living allowance.

  Beijing authorities have allowed companies to waive some social security payments, including contributions to pension, unemployment and work injury funds — measures that could further hit vulnerable workers.

  Job losses raise the likelihood of laid-off migrant workers returning to poorer rural areas and slipping into poverty.

  Liu Sihua, 49, a domestic worker, has been stranded in her village in eastern Anhui Province since the middle of January with no income or unemployment benefits.

  “My landlord in Beijing refuses to allow outsiders to return after the virus scare,” she said. “The family I was working for ... went back to the Netherlands, and now I don’t know when they will come back since China has temporarily banned foreigners from entering.”

  To compensate, authorities are easing stringent regulations governing the lives of rural migrants working in urban areas, allowing them greater access to the property market, healthcare and education in some smaller cities.

  “Poverty eradication is harder to achieve given the current situation, which could not possibly have been foreseen,” Zhao Litao (趙力濤) of Singapore’s East Asian Institute said.

  Other analysts warn not to place too much weight on achieving artificial targets.

  Wiping out extreme poverty could prove a “narrow” concept that distorts the real economic picture as local governments pursue all means possible to be seen meeting targets, sometimes at considerable cost, Kuijs said.
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