China's Industrial Upgrading Or Unemployment Predicament

The rapid growth of exports after China's accession to the WTO and the expansion of investment in the central and western regions brought about a large demand for labor, resulting in the first shortage of migrant workers in 2004. We should not only reflect on the background of asset bubbles. The labor Shortage and consideration. foam What is the consequence of the disillusionment? In the future, accompanied by industrial upgrading, not only will the new employment absorbed by the second industry decrease, it will also affect the first and third industries. industry As for the employment level and employment structure, there is no lack of probability of unemployment in China in the next five years.

Although there is labor shortage in China, we can not simply use Lewis's inflection point theory to infer the labor force problem in the future, because China's migration from rural areas to cities is far from over. The phased shortage of labor force may be built on the production bubble, and the development mode of a large country with 1 billion 340 million population may not simply draw on the development economics theory lacking the case of big powers.

After the Spring Festival of 2004, there was a shortage of migrant workers for the first time in China. To know what this is all about, we must first know what has happened to China's economy in the 2003.

The export sector should be an important sector to increase employment. After China joined the WTO at the end of 2001, exports increased significantly. In 2002, the export growth rate was 22%. In 2003, it rose to 35%. It can be seen that China established the status of the world factory after 2003, and China's labor force began to work for the global consumers.

Look at the investment again. In 2003, the growth rate of fixed assets investment in the whole society reached 27%, which was also a high growth rate in the 1999-2008 year round of the Zhu la la cycle. In that year, the contribution of capital formation to GDP growth reached 63.7%, the highest in the past 10 years. The rapid growth of fixed asset investment has also benefited from the development strategy of the western development which began in 2000 and the revitalization of the old industrial base in Northeast China, which began in 2003. The resulting high investment in the central and western regions has also made the Midwest labor force a demand place.

Therefore, the shortage of migrant workers for the first time in 2004 should be the transfer of labor force from rural to urban areas, which eventually led to the shortage of rural labor supply, and the demand for labor mainly stems from the rapid growth of China's exports after the accession to the WTO and the investment expansion in the central and western regions.

The study found that once the shortage of migrant workers appeared, it would be reflected in the GDP scale of the year as a high growth rate. This is in line with the introduction of macroeconomic regulation and control, and the three policy tightening in 2004-2005, 2007-2008 and 2010-2011 years is no exception. Its characteristics are to take control measures first, then set the tone at the central economic work conference at the end of the year, such as changing the active fiscal policy into a prudent fiscal policy at the end of 2004, changing the prudent monetary policy to a tight monetary policy at the end of 2007, and changing the moderately wide monetary policy to a prudent monetary policy at the end of 2010.

Although each regulation is aimed at structural adjustment, it is actually only a drop in temperature. The structural contradiction of economic development is becoming more and more prominent. The main performance is the rising of various asset prices represented by real estate, such as the national average housing price income ratio has reached 8.1 times in 2009, far higher than that of developed countries 3 to 5 times. Rising housing prices drive land prices to rise, and the rapid growth of the economy has driven the rise of mineral resources and other prices. In short, China's asset bubble has gradually formed in the past 2003-2010 years, mainly through the mode of "Foreign Exchange Inflow - basic money supply - land finance and money creation". Today, the scale of China's M2 has reached 75 trillion yuan, ranking first in the world, and its proportion is nearly two times that of GDP. The reason why M2 has grown so fast is related to the fact that the underlying currency created by foreign exchange has not been completely washed away since 2003. According to our estimate, by the end of 2010, about 5 trillion and 500 billion yuan had not been recovered and had been creating currency.

Money creation itself has no problems. The key is that asset price inflation is not sustainable. It will inevitably bring about a bubble burst and a breakup of the capital chain, thereby affecting the economy and thus affecting employment. In 2003, the shortage of migrant workers in China was consistent with the process of asset price inflation, accompanied by the high growth of investment. In 2009, the economy grew by 9.1%, of which investment contributed more than 90%, and in 2010 it was more than 70%. Compared to the Japanese economy, which has been identified as the turning point of Lewis in the past 1960-1970 years, although its capital formation is the highest in GDP, it reaches 35%, but after all, private consumption accounts for the largest part, and there is no asset bubble. Therefore, we really need to think about whether there will be a shortage of migrant workers in China if there is no asset bubble in 2004. We should really reflect on the phenomenon of labor shortage in the context of asset bubbles, and consider what the consequences of bubble collapse are.

According to the central bank's regional financial operation report 2010, the credit balance of the local financing platform is estimated at more than 10 trillion yuan, far exceeding the original valuation of 7 trillion yuan. It is hard to know how bad these loans will lead to, but it is not optimistic.

In the central and western regions, the ratio of input to output is much lower than that in the eastern coastal area, which is a key factor in the quality of loan quality in the pursuit of regional balanced development. Second, from the credit period, the debt repayment in most of the financing platforms is in 2009, then the peak of repayment will be formed in 2012-2014 years. The increase in bad debts will affect the operation of the economy. Third, whether the current economic downturn will lead to the burst of asset bubbles is hard to predict, but at the same time, it inhibits the further rise of asset prices, such as housing and land, and inhibits the total demand of the society. This will also make the investment growth mode in all regions, especially in the central and western regions, difficult to sustain for a long time, thus increasing the local debt burden. The reasons are: first, from the perspective of subregion, from 1995 to 2009, the proportion of investment in fixed assets in the central and western regions increased from 42% to 58%, while that in the eastern coastal area dropped from 58% to 42%, but the proportion of GDP in the central and western regions was not.

Industrial upgrading will affect employment structure and employment rate.

Although public opinion has been calling for China to promote industrial upgrading as soon as possible, in fact, China's industrial upgrading has never ceased. In this regard, we can observe through the window of foreign trade import and export. Over the past 10 years, the share of labor-intensive products such as textiles, clothing, footwear and toys has been declining. The proportion of capital intensive products such as steel and metal products has increased and then decreased. Capital and technology intensive products such as chemical products, transportation equipment, instruments and meters are rising. This change clearly outlines the upgrading order of China's export sector's industrial structure. For example, the mechanical and electrical industry is the fastest growing industrial product in China in the past ten years, and it is also the highest export industrial product. In the past 15 years, the export of China's electromechanical products increased from 20% to 50%.

With the rapid growth of China's second industry and manufacturing industry, we estimate that China's manufacturing value-added will be about $1 trillion and 970 billion in 2010, and China has surpassed the United States as the world's largest manufacturing country. Against this background, China's consumption of resources has directly affected the supply and price of global resource goods. This is similar to the problems faced by the United States and Japan in the 70s of last century. The profit margins of Chinese manufacturing industry will be squeezed in the future, and the growth rate of manufacturing industry will also slow down. From the recent two quarters of the profit margin of industrial large industries, the average gross profit margin of raw materials industry in the middle reaches is less than 2%, indicating that the high resource prices have seriously squeezed the profit of the middle reaches manufacturing industry.

In the upgrading process of China's second industry, the employment growth rate also showed signs of decline. For example, according to the National Bureau of statistics, the number of new jobs increased by more than 10 million every year in 2006 and 2007, while that in 2008 and 2009 dropped to 500-600. This involves the continuous decline of employment elasticity in the process of industrial upgrading. From the survey data provided by the Ministry of human resources and social security, we can find that in the first quarter of 2011, 68.6% of the demand for occupations was concentrated in the two major posts of production and transportation equipment operators, business and service personnel, and their demand accounted for 34.9% and 33.7% respectively. Job vacancies and job seekers in all technical ranks are more than 1, indicating that labor demand is greater than supply. Among them, the ratio of job vacancies and job seekers in senior engineers, technicians and senior technicians is 2.29, 2.19 and 1.89 respectively, which indicates that the supply of advanced workers and technicians is in short supply.

From the perspective of the nature of labor demand, private enterprises have always been the sectors that attract the most new jobs. In the first quarter of 2011, the demand for labor in private enterprises dropped by 3.2% over the same period last year, indicating that the increase of human cost and credit cost has a significant impact on the improvement of operating costs of low-end enterprises. Because the majority of private enterprises belong to small and medium-sized enterprises, and small and medium-sized enterprises provide about 80% of urban employment posts, the upgrading process means that the proportion of capital intensive and technology intensive enterprises is rising, which means that the employment ability of labor-intensive SMEs is weakened. For example, the number of workers in the textile and garment industry in the United States is the largest in the manufacturing industry, accounting for 10% of the total number of industrial labor force. With the upgrading of textile and garment industry, the number of textile employment has gradually declined from 691 thousand in 1990 to 478 thousand in 2001, and the number of garment employment has dropped from 1 million 36 thousand to 566 thousand.

In addition, the process of industrial upgrading is not only the process of slowing down the growth of low end employment demand, but also the process of economic slowdown, which is also unfavorable for increasing the total employment demand. For example, in the process of industrial upgrading in the 70s of last century, the United States and Japan both accompanied by economic deceleration, for example, GDP growth in the United States dropped from 4.5% to 3%, while Japan dropped from 10% to 4%. China's "12th Five-Year plan" will reduce the growth rate of GDP to 7%, and the actual result may not be so low, but even 8% will be down to two steps faster than the average growth rate of 10.5% over the past 10 years. Moreover, the industrial upgrading not only reduces the number of new employment absorbed by the second industry, but also affects the employment level and employment structure of the first and third industries, such as the increase of the degree of agricultural mechanization, which makes the absolute number of agricultural employment decrease. The service industry is also facing industrial upgrading, which will also increase the employment demand of high-end industries, such as financial services and information industries, and reduce the employment demand of low-end industries. Therefore, the service industry is not simply an industry to absorb the surplus labor force in the first and second industries.

The future labor structure indicates that unemployment will be highlighted.

According to the data provided by the National Bureau of statistics, in the end of 2009, China had a total employment population of 779 million 950 thousand, of which the first industry was 297 million 80 thousand, the second industry was 216 million 840 thousand, and the third industry was 266 million 30 thousand. To this end, we can figure out that the per capita added value of the first industry is 11 thousand and 900 yuan, while the average value added per capita of the two or three industry is 63 thousand and 200 yuan, and the average value created by agricultural laborers is almost 1/6 of the latter. Therefore, the trend of rural labor force transferring to cities will not change in the future. At present, the rural resident population is 674 million, assuming that the urbanization rate will reach 58% (conservative estimate) after 10 years, and the net increase of 60 million in China will mean that 116 million rural population will enter the city in the next 10 years. According to official figures, the number of migrant workers at the end of 2010 was 153 million 350 thousand, an increase of 8 million over 2009. Assuming that the number of migrant workers in the next 10 years is increasing at an annual rate of 8 million, the matching relationship between 80 million migrant workers in the 10 years and 116 million rural population transferring to cities is basically established.

In addition to the transfer of rural labor to the cities, the labor force of the city itself is constantly emerging. For example, 6 million 500 thousand graduates will graduate in 2011, plus secondary vocational school, technical school graduates, and senior high school graduates who have not been admitted to universities. They need to find jobs. According to the Ministry of human resources and social security, the number of new job seekers in cities and towns will reach 14 million. If the laid-off reemployment and rural labor force are added, the urban labor supply will reach 32 million in 2011. This figure has clearly indicated that the supply of labor exceeds demand.

Let's look at the elasticity of employment again, we can see that the total employment elasticity tends to decline, the employment elasticity in 1998 is 0.19, and only 0.07 in 2009. Moreover, the decline in the employment elasticity of the second industry is more obvious, from 0.57 in 2005 to 0.28 in 2009. Although the resilience of the third industries in recent years has picked up, it is still lower than the highest point, and 2009 is 0.36.

This means that even if the economic growth rate does not decline, the number of new jobs per year can only be maintained at a stable level, and once the economic growth rate falls, the number of new employment will be reduced. According to official statistics, in 2010, 11 million 680 thousand new urban employment personnel, 5 million 470 thousand laid-off workers to re employment, employment difficulties for re employment of 1 million 650 thousand people. The number of registered unemployed in urban areas was 9 million 80 thousand at the end of the year. These data indicate that even in the 2010 with high economic growth, the situation of labor supply exceeding demand still exists, and the total number of unemployed and unregistered cities entering the city without finding jobs is about 4 million. Therefore, to some extent, the shortage of migrant workers is related to the structure of labor supply and demand.

China put forward in the 12th Five-Year plan that the output value of the third industry increased by 4 percentage points to 47%, and the proportion of the corresponding one or two industries will drop. Therefore, although the third industry will become the largest industry to absorb employment, but because of the decline in the proportion of the one or two industries, the number of employed persons in the first industry in the next 5 years will be reduced by 10 million per year (the official statistics 2006-2009 decrease in 3 years in 2006-2009 years), and the reduction will be reduced. If the proportion of the employment industry is increased, if the employment rate can only increase from the end of the year to the total number of employed persons in China to 2015, the new employment that will be absorbed every year is only about 10% in the coming years. That is to say, the amount of labor force reduced by the agricultural sector in the next 5 years is basically equal to the quantity of labor force demanded by the service sector. However, with the upgrading of industries, the number of labor force reduced by the agricultural sector can meet the needs of the two or three industry, which is probably a major source of structural unemployment in the future.

For the second industry, its manufacturing industry has changed from capital shortage to capital surplus. With the continuous upgrading of industry and its decline in GDP share, the elasticity of employment will continue to fall. Many labour intensive industries have further reduced their profit margins due to domestic wage costs and rising raw material costs. At present, the growth rate of investment in the middle reaches has been significantly reduced, and will be transferred to other developing countries such as India and Vietnam. Only high-end manufacturing industries such as pharmaceutical manufacturing, transportation equipment, instrumentation, electrical machinery, general equipment and other industries have potential for development, but the employment created by these industries is very limited. Therefore, the number of new employment in the next second industries will hardly be maintained at 500-600 yuan per year, and it will probably fall to around 200-300 people by the end of 12th Five-Year, and the next five years will probably be negative growth. And this inference has not taken into account the future economic cycle fluctuations, such as the bursting of capital bubbles, and so on. If considered, the employment situation will be even more severe.

Therefore, the reduction of employment in the next second industries will become the main source of unemployment. If the asset bubble burst in the past two years, the unemployment problem will accelerate. However, due to the momentum of urbanization, the bubble is not big enough, so the Chinese economy can still recuperate and rise again, but the problem of unemployment will be prolonged. If the asset bubble burst in 2015-2020 years, China's urbanization process has slowed down considerably, and the driving force of economic growth has been insufficient. It is difficult to use stimulus policies to revitalize the economy, so the next five years will be more likely for China to get into unemployment predicament.