Employment Growth, Labour Scarcity and the Nature of China’s Trade Expansion

    Since the mid 1990s, China has deepened its reforms of state-owned enterprises,urban employment and social welfare systems in order to improve the efficiency of state-owned enterprises and enhance their survival capabilities in the face of fierce international competition. The reforms have released millions of rendundant urban workers and the issue of unemployment has become a top priority in Chinese social and economic policies.
    China finally joined the World Trade Organization (WTO) late in 2001. Some commentators predicted that accession to the WTO might worsen urban unemployment. Rapid trade expansion has, however, not only fuelled Chinese economic growth, it has created more job opportunities by expanding nonagricultural sectors, mitigating the severe pressure of urban unemployment.
    The emergence of a shortage of rural migrant workers signals, to a certain extent, the transition in the rural labour force supply from an unlimited to a limited surplus (Cai and Wang 2005, Wang et al. 2006). The wages of rural migrant workers have grown at an average annual rate of more than 10 per cent in recent years. If this trend continues, and unless labour productivity grows rapidly, increases in labour costs will be unavoidable, threatening the competitiveness of Chinese manufacturing industry.This chapter has four parts. Part one examines employment growth and changing situations of urban employment. Part two describes the trade expansion and its impact on employment growth. Part three discusses labour scarcities and their impact on the international competitiveness of Chinese manufacturing. The chapter concludes with a discussion of some policy implications.
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    （in Ross Garnaut and Ligang Song (eds.), The Turning Point in China’s Economic Development, Canberra: Asia Pacific Press,2006）