Chinese Manufacturing Employment

Published on Author petersonn18

Since China’s economic reforms under the leadership of Deng Xiaoping, Chinese steel production has increased greatly and in 2015 produced 803.8 million tones of steel, over 50% of the world’s total production (World steel). Various large state-owned groups such as Baosteel, Angang Steel Company, Tangshan, and Hebei Iron and Steel lead the Chinese steel industry. However, due to lowered demand and the 2015-2016 Chinese stock market crash, the Chinese government announced large-scale closures and downsizing of China’s steel industry.

One of the first areas to be hit by steel production downsizing was the Tangshan district, which itself produces more steel than the US (abc). As a result, production is to be cut by two thirds resulting to a loss of 7,000 jobs and many workers who now have no livelihood. While these workers are owed salarieschn1 by the government, they have seen none of their money and fear for their future.

Altogether, Chinese authorities announced 400,000 people are expected to lose their jobs by 2020 but estimates go as high as 2 million (abc). With further downsizing on the horizon, mass unemployment and social unrest may ensue until the Chinese government is able to find suitable solutions for those who lost their livelihood from the downsizing.


7 Responses to Chinese Manufacturing Employment

  1. A recent decline in exports has prompted this decrease in manufacturing employment. On March 8th, “China reported its largest monthly drop in exports since the financial crisis.” The customs administration concluded that “exports in February fell 25.4% in dollar terms year-over-year, compared with a drop of 11.2% in January.” This data indicates that China’s external trade may hinder economic growth amid lackluster global demand.

  2. The Steel industry in China has developed over several decades into the world biggest.[1] China accounted for over 50% of world steel production in 2013.[1] It has driven by rapid modernisation of its economy, construction, infrastructure and manufacturing industries. China produced 123 million tons of steel in 1999. After its ascension to the WTO it aggressively expanded its production for its growing appetite of manufacturing industries such as automotive vehicles, consumer electronics and building materials.
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  3. Some economists argue that China’s decreasing domestic demand for steel has also led to a dip in global steel prices. The decreasing demand in China causes China to look to export its excess supply, leading to a 22% increase in exports in 2015 (WSJ). International steel competitors are threatened by Chinese steel because government subsidies make production very cheap. As a result, many countries have turned to high tariffs on Chinese steel.

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  4. There will be less job demand for migrants from rural areas since most of the labor work is done by migrants. All the problems caused by urban bias, such as health insurance issue, the gap in educational access because of hukou system, and left-behind elderly problems could be eased. Meanwhile, the fall of manufacturing employment might influence the GDP of China in a negative way if technology innovations does not catch up.

  5. As it was noted in a comment on the last post about Chinese steel production, the environmental impacts of a steel industry slowdown are definitely positive. The carbon emissions that occur during steel production are high enough to impact the country’s effect on the environment – especially because the country’s steel production outnumbers that of the rest of the world combined. So although the shutdown of some factories and firms will end up beneficial in this regard, it is doubtful the aspect was heavily considered.

  6. The steel industry rapidly expanded under government funding. From 1996 to the present, steel output increased by 722 million tons. However, with the slowing economy, maintaining this growth is not feasible. Thus, the economic slowdown is an opportunity to reduce the size and pollution of the steel industry. Furthermore, President Xi Jinping’s goals appear to seek “to reorient the national economy toward a sustainable and slower-growing “new normal.””

  7. What industries can we expect this giant portion of the labor market to go into? And will this slow down the migration from rural to urban areas? Given that factory work is what where they would be employed.