Sat, May 29, 2004 page12

• Soaring number of jobless threatens Chinese economy

  NO PROSPECTS The never-ending flood of migrant workers and an increasing number of university graduates is putting pressure on Beijing to create more jobs

  • NY TIMES NEWS SERVICE
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  With China's leaders struggling to engineer a soft landing for the country's overheating economy, Zhao Guangxi and Zhou Ruidong face a problem more typical of a country mired in a deep recession. Neither man can find a job.

  Zhao, 33, is a migrant worker, one of hundreds of shabbily dressed men who loiter beside a small park in southwest Beijing hoping for work as day laborers.

  

  Young job hunters check computer screens for vacancies at Dalian Qixiuyu Employment Agency in Dalian yesterday. China's pool of working-age people is swelling by nearly 14 million a year.

  PHOTO: REUTERS

  He shares a room with 10 other men, five of whom are jobless. If he is lucky he can earn US$5 a day. Lately he has been unlucky.

  Zhou, 20, is a college student, one of several thousand people who attended a recent job fair in an affluent section of northeast Bei-jing. A college degree once meant an automatic good job and salary in China, but Zhou has been looking for work since January. He graduates next month, and he may have to move home with his parents.

  "I have nothing, no prospective offers," he said.

  The prospect that China's torrid economy could crash-land is spawning fears of a real estate bust, a banking bailout and a wave of inflation rippling around the world. Most experts discount such predictions, but even if China does land softly, such good news is still bad news in terms of unemployment.

  By putting the brakes on economic growth, even gently, China is slowing an economy that must roar just to keep unemployment from rising. Employment pressures are so great that even as growth neared double digits in the last 12 months, urban unemployment still rose. In the countryside the situation is far worse.

  The political pressure on the Communist Party to continue creating jobs is enormous. Zhao is one of more than 110 million migrant workers who have left the countryside for cities in search of jobs in factories or on construction sites. Zhou is one of a growing number of college students whose unmet job expectations acutely concern the government.

  "This is a group of people who traditionally tend to go to the street if they feel dissatisfied," said Liang Hong (梁紅), China economist in the Hong Kong office of Goldman Sachs.

  She noted that timing was also sensitive. The 15th anniversary of the June 4, 1989, Tienanmen crackdown is only days away.

  "It's a very potent group," she said of the college students.

  As yet, the frustration of students has not yet led to protests, though some have mockingly mouthed the phrase "Graduation is unemployment."

  Protests over layoffs or compensation disputes are a regular occurrence among poorer people, whose desperation makes them willing to risk affronting Beijing.

  The complicated challenge was evident in March, when Prime Minister Wen Jiabao (溫家寶), delivering his equivalent of a State of the Union address, pledged to cool the economy and to create more jobs.

  More recently officials have promised that 70 percent of college students this year would find jobs by graduation day, the sort of promise that unnerves economists who want China to remain committed to a market economy.

  China's embrace of capitalism is the reason it has become a manufacturing hub and one of the growth engines for the world economy. Yet it is also why employment is such an intractable problem. The transition from a planned economy to a market economy cost tens of millions of workers their jobs with the closings of inefficient state-owned enterprises. Millions more are expected to lose their jobs in coming years.

  Economists say China must sus-tain an annual growth rate of more than 7 percent into the foreseeable future to break even on employment as the country continues to restructure its economy.

  Zhou is part of a record expansion in university enrollment that began in 1998, partly as an economic stimulus during the Asian financial crisis. The number of entering freshmen has jumped to almost 4 million students, compared with 1 million in 1998.

  Min Tang, an Asian Development Bank economist in Beijing, said the expansion had raised the percentage of 18-to-22-year-olds in college from 4 percent to 15 percent. For many of those new students, college was supposed to bring immediate rewards on graduation. Poor students often borrow money from relatives and feel pressure to pay them back quickly.

  Now, though, the job market is more competitive.

  "Ten years ago Chinese education was for elites," Min said. "If you graduated from college you were almost guaranteed a good job. Now student enrollment has increased, but they still expect to get the same type of job as before."
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