China's soft spot in trade war with Trump: Risk of huge job losses

Business Standard

a day ago

US President Trump taunted China in his first term, claiming his tariffs had led to the loss of five million jobs there. In a 2019 tweet, he said his trade policies had put China 'back on its heels.'
Economists sharply disputed how much pain Trump's tariffs caused, but the message underscored the centrality of jobs to China's export-reliant economy.
Four months into Trump's second term, the United States and China are again negotiating over tariffs, and the Chinese labour market—especially factory jobs—is front and centre. This time, China's economy is struggling, leaving its workers more vulnerable. A persistent property slowdown that worsened during the Covid-19 pandemic has wiped out jobs and made people feel poorer. New university graduates are pouring into the labour pool at a time when the unemployment rate among young workers is in the double digits.
'The situation is clearly much worse,' said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at investment bank Natixis. As employment opportunities in other sectors disappear, she said, the importance of preserving China's 100 million manufacturing jobs has grown.
Natixis said that if US tariffs stayed at their current levels of at least 30 per cent, exports to the United States would fall by half, resulting in a loss of up to six million manufacturing jobs. If the trade war resumes in full, job losses could surge to nine million.
China's economy has struggled to recover from the pandemic, expanding more slowly than during Trump's first term, when growth topped 6 per cent a year. Although the Chinese government has set a target of around 5 per cent growth this year, many economists predict the actual figure will fall short.
In early 2018, China reported its urban jobless rate had fallen to a 15-year low and that the country had created a record number of new jobs. Since then, government crackdowns and tighter regulations have subdued industries like technology and online education—once-thriving sectors that generated numerous jobs.
Over those years, unemployment climbed, especially among young people. The jobless rate among 16-to-24-year-olds was 15.8 per cent in April, a slight improvement from the previous month. However, the figure is expected to surge again when 12 million new college graduates enter the workforce this year.
In 2023, when youth unemployment reached a record 21.3 per cent, the Chinese government suspended the release of the figures. At the time, one prominent economist claimed the real figure was closer to 50 per cent. Beijing resumed publishing the data last year using a revised methodology that lowered the reported rate.
At the same time, even those with jobs are in a more precarious position. Fewer companies are offering full-time roles, relying instead on gig workers for services like food delivery and manufacturing. While those jobs offer flexibility, they typically pay less and come with few protections or benefits.
In late April, Yu Jiadong, a senior official at China's Ministry of Human Resources and Social Security, said the government had prepared measures to maintain employment stability, particularly for Chinese exporters.