Daily Management Review

Why China has to cover up the unemployment rate


06/07/2016


When it comes to inaccurate statistics, all at once recall China’s fabricated data on exports and imports, intended to hide the flight of capital, as well as "successful" GDP data.



every one via flickr
every one via flickr
Chinese statistics has long been talk of the town, especially in the developed world.

More recently, Goldman analysts found that the country distorts an index of total general funding by hundreds of billions, if not more, as the shadow banking flows are not taken into account there.

And now, according to a new study by Fathom Consulting, it appears that China also publishes invalid data on the unemployment rate - one of the most important indicators of social stability.

According to Fathom Consulting, the real unemployment rate is more than three times higher than the official data.

The agency says that underemployment in China has tripled to 12.9% since 2012, while the official rate is about 4% in the last five years.

This statistic confirms the growing risks associated with social upheaval, when millions of unemployed would be destroying the "unregulated economy."

It is possible that this is why China has quickly returned to the old proven way of credit bails to stabilize the weakening economy.

The Chinese authorities have confirmed that preservation of stable employment is a top priority. At the same time, they managed to avoid mass layoffs, although the number of people, who are not working full time, has grown in recent years.

According to analysts of the London company, China has a considerably big hidden unemployment problem, and it is therefore forced to run the old growth model.

Leaders of the most populous country of the world pledged to reduce excess capacity in the coal mines and steel mills, at the same time ensuring that the economy will grow by at least 6.5% this year.

In fact, now all countries have plant-zombies which keep going only thanks to support of the authorities, who are trying to avoid any social unrest. To keep the operation of factories, workers offer to work, for example, half the time for half the salary.

This officially registered unemployment rate did not change during economic cycles. In other words, the unemployment rate in China is now also worth questioning. In addition, you should always keep in mind that this figure includes only those receiving unemployment benefits in local government.

This leaves out at least 270 million migrant workers in the country. There is also another official unemployment rate, based on surveys in major cities. In April, the figure was 5.1%, and it also has not changed for the last 2 years, that is, it is useless, too.

Beijing’ actions are clear: job insecurity is the most dangerous factor for social stability and the authorities should avoid this at all costs. That is why the Communist Party’s officials are paying this much attention.

However, oddly enough, a similar situation exists in many countries, including the United States, where the National Bureau of Statistics shows only the tip of the unemployed army’s iceberg.

As Fathom estimated, each quarter China must increase lending to 1 trillion yuan, equivalent to about 10% of GDP, to keep the local population engaged at least partially. 

source: reuters.com






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