Officials' Early Response to Unemployment and "Social Unrest" During Downturn

Since late 2008, Premier Wen Jiabao and other high level officials have made public statements acknowledging rising unemployment in China and the new challenges to "social stability" posed by unemployed migrant workers, according to a January 28 BBC report and a February 2 Financial Times report. (For more discussion of "social stability" and "social unrest," see the Preface and General Overview in the Congressional-Executive Commission on China 2008 Annual Report.)

Lower Economic Growth and Higher Unemployment

Chinese officials have stressed that 8 percent is the minimum needed to create enough jobs to avoid unrest, according to a January 29 Economist report. The latest economic figures may add to the leadership's concern. China's gross domestic product (GDP) growth rate slowed to 6.8 percent in the fourth quarter of 2008, marking the lowest growth rate since 2002, according to a January 22 China Daily report citing an official from China's National Bureau of Statistics.

Among the challenges associated with the downturn, two issues related to employment--migrant workers' returning home and employment of college graduates--remain the most worrisome to Chinese leaders despite new measures to sustain economic growth and restrain inflation, as Premier Wen Jiabao has indicated, according to a December 20, 2008, China News report. According to Wen, employment of college graduates is a top priority for the government because 6.5 million college graduates are expected to join the workforce in 2009, and even if China's economy attains the 8 percent target growth rate in 2009, it can provide at most 9 million jobs.

Furthermore, an estimated 20 million migrant workers throughout China either have lost jobs or returned home without employment due to the global financial crisis, according to Chen Xiwen, a rural issues expert who serves as director of the Office of the Central Leading Group on Rural Work and deputy director of the Office of the Central Leading Group on Finance and Economics, as quoted in a February 2 Caijing report. Chen also stated that unemployment among migrant workers may deteriorate during the first half of 2009 before the financial crisis "hits the bottom."

Concern over "Social Unrest"

In response to rising unemployment among migrant workers and the possibility of "mass incidents" related to social problems exacerbated by the economic downturn, the government has issued new policies, including the State Council Circular Regarding Handling Current Migrant Worker Affairs (State Council Circular) on December 20, 2008, PRC Central People's Government Opinions Regarding Promoting Agricultural Development and Increasing Farmers' Income (Or the so-called "No. 1 Document") on December 31, 2008, and Guiding Opinion Regarding Handling Current Economic Situation and Stabilizing Labor Relations on January 23, 2009. These three documents place emphasis on migrant workers, farmers, and laborers respectively, but they all make reference to "maintaining social harmony and stability" during the financial crisis.

Labor disputes nearly doubled in the first 10 months of 2008 compared to the same period of 2007, according to Wang Shenqjun, president of the Supreme People's Court, as quoted in a December 22, 2008, Radio Free Asia report. The Sunday Times documented numerous protests by farmers, factory workers, and teachers against their employers and government offices in Guangdong, Zhejiang, and Jiangsu provinces in December 2008 and January 2009, according to its February 1, 2009, report.

Officials have identified sensitive issues such as confiscation of rural land, environmental pollution, citizen relocation and resettlement, and handling of collective properties that may trigger "mass incidents," according to a February 2, 2009, Xinhua report. In response to a question regarding how local governments should handle protests, Chen Xiwen explained:

"If 'mass incidents' happen, leaders at all levels must be at the front line to explain to the people and persuade them face-to-face. Leaders cannot hide behind public security or the police, thus causing conflicts. Except for those unfortunate situations where there is beating, attacking, robbing, or burning, in principle, no police should be deployed. Leaders at all levels should go to the front line to solve problems."

Chen also cited 'mass incidents' in Guizhou and Yunnan provinces in 2008 as examples of local authorities' "poor handling" of protests and harming the people's interests as a result.

Migrant Workers and Hukou

The economic downturn, the concern over unemployed migrant workers, and official unease about "social unrest" also have rekindled discussion of how to implement long-term protections for migrant workers effectively, and of the possible abolition of the household registration (hukou) system. (For a discussion of China's household registration system, see section II--Freedom of Residence in the CECC 2008 Annual Report, including the Addendum: Recent Hukou Reforms (pp. 105-112); for a broader retrospective, see also the CECC October 2005 CECC topic paper on China's household registration system, and a chart on Chinese Hukou reforms as of 2004.)

China has 950 million citizens who hold rural hukou, including 130 million migrant workers who have rural hukou but work and live in urban areas, according to a January 19, 2009, Caijing report. Migrant workers without urban hukou are more vulnerable to exploitation. The economic downturn risks "amplifying rights violations" linked to China's discriminatory hukou system, which denies migrant workers the social welfare benefits available to those who hold urban hukou, according to a Human Rights Watch statement on January 23. Many unemployed migrant workers without urban hukou choose to return home after losing jobs. However, disputes occur when migrant workers return home to find that their land has been either "collectively contracted" without their consent by local officials for other commercial purposes or contracted to other farmers, according to the January 19 Caijing report. For the longer-term protection of migrant workers and to prevent "social instability," experts have called for accelerating hukou reforms that would allow migrant workers to integrate fully into the urban system, according to a January 25, 2009, Xinhua report, and Caijing reports on December 18 and 23, 2008.

For more information on the economic downturn and "social instability," see a previous CECC analysis: Officials To Strengthen Security Before Anniversaries and During Economic Downturns.