THE RISING EAST
Employment topping China's worries

By Richard Halloran

China's multitude of people out of work or in meager part-time jobs is soaring past 300 million, affecting the nation's foreign policy, military posture, internal politics and, of course, its economic progress.

The United States buys a third of China's exports — such as electronics — and with unemployment estimated at 300 million, Beijing has resisted U.S. pressure to make its products more expensive.

Consequently, Chinese leaders have made generating jobs a priority equal to economic growth. The new president, Hu Jintao, says it is vital to China's stability, according to the People's Daily, the official newspaper.

Similarly, the new premier, Wen Jiabao, says, "China is under tremendous pressure to produce employment."

Perhaps the bleakest assessment comes from Hu Angang, an economist at Tsinghua University in Beijing. (He is not related to the president.) Hu calls the competition for jobs in China "the largest employment war in the world."

That pressure is among the reasons, some American officials believe, China has joined South Korea, Japan, Russia and the United States to persuade North Korea to abandon its plans for acquiring nuclear arms. The Chinese see the North Korean issue as a distraction from more pressing needs. China recently moved additional troops to the border with North Korea to reinforce its position.

China's ocean of jobless labor has stiffened the regime's resistance to U.S. demands that it revalue its currency to make exports less competitive with American products. One-third of China's exports come to the United States. A cut in those exports, worth probably more than $130 billion this year, would idle even more Chinese workers.

For China's armed forces, the mass unemployment has caused a dilemma.

Jiang Zemin, the former president who is still chairman of the nation's military commission, has announced that the People's Liberation Army will soon discharge 200,000 soldiers, presumably to free up money to modernize the armed forces. Adding those soldiers to the labor force will compound the problem. And they will have priority for jobs, which may anger civilian workers.

Politically, labor unrest is rising, according to Chinese press reports, particularly in the northeast, where many old factories have been closed.

Labor organizations say protests in different parts of China are beginning to look coordinated.

Moreover, only half of this year's 2.2 million university graduates have gotten jobs. Student activists led the pro-democracy demonstrations at Tianamen in June 1989, after which the army killed 2,000 to 2,500 protesters. The government plans to lay off an additional 430,000 workers in Beijing this year.

Economically, unemployment has risen despite national growth rates of 7 percent to 9 percent a year. Reforms have forced inefficient state-owned enterprises to lay off workers in a struggle to survive. Farmers are leaving home to look for jobs along the industrializing coast. The recent scare caused by the respiratory illness SARS hit service industries particularly hard.

A silver lining: China's surplus labor has attracted foreign investors, including from Taiwan, which China claims as a breakaway province. South Korea, which recovered faster than most from the Asian financial crisis of the late 1990s, has been another investor.

Getting an accurate grip on the number of unemployed or under-employed in China is difficult, if not impossible. The size of the population, primitive conditions in the interior, where 900 million farmers live, and imperfect methods of counting preclude all but educated estimates.

Chinese and international sources include 150 million surplus workers in rural China. An additional 100 million are in motion every day looking for work. The 30 million workers laid off from state-owned enterprises are not counted, because they are considered furloughed. About 8 million are registered as unemployed because their former employers went out of business. Another 10 million have come into the labor force without jobs in each of the past several years.

A clue to China's overall unemployment: The U.S. State Department has estimated that 350 million Chinese live in poverty. Thus, Premier Wen Jiabao might be forgiven for lamenting: "It is not an easy job at all to be a good premier ... I feel the responsibilities on my shoulders are extremely great."

Richard Halloran is a former New York Times reporter in Asia.