CHINESE GOVERNMENT SEEKS BETTER UNEMPLOYMENT DATA

UNCLAS BEIJING 000232 DEPT PASS USTR FOR KARESH, ROSENBERG, STRATFORD, LEE LABOR FOR ILAB AND OSEC TREAS FOR OASIA/ISA-CUSHMAN USDOC FOR 4420/ITA/MAC/MCQUEEN AND DAS KASOFF E.O. 12958: N/A TAGS: ELAB ECON PGOV SOCI CH SUBJECT: CHINESE GOVERNMENT SEEKS BETTER UNEMPLOYMENT DATA Ref: 08 Beijing 4605 SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. ¶1. (U) Summary: China s official unemployment rate, which rose to 4.2 percent in December, is unrealistic and does not capture over 100 million migrant workers most affected by the economic downturn in late 2008. According to government officials and a local labor economist, the government knows it needs better labor statistics. The government is working to improve unemployment data collection, but does not make this data available to the public. Government measures to respond to the surge in unemployment in late 2008 may be effective in the short-term, the labor economist told Laboff, but the government will need better labor statistics to determine whether the policies it will undertake to boost domestic demand and promote long-term growth are appropriate or effective. End summary. ¶1. (U) On January 20, China s Ministry of Human Resources and Social Security (MOHRSS) announced at a press conference that the nationwide registered unemployment rate rose from 4 to 4.2 percent in December. This rate is significantly lower than a much-quoted 9.4 percent rate, for the same period, published by the China Academy of Social Sciences (CASS). MOHRSS spokesman Yin Chengji specifically addressed the disparity with the CASS report, noting that registered unemployment only reflects the percentage of working urban residents who receive unemployment benefits. Yin said that MOHRSS is conducting surveys of economically active people in urban areas to get a more accurate fix on the unemployment rate, and would strive to publish the data at an early date once the Ministry was satisfied that it was accurate. ¶2. (SBU) In a December 2008 meeting (ref) with visiting U.S. Department of Labor officials, MOHRSS Vice Minister Wang Xiaochu acknowledged that MOHRSS was conducting surveys of its own to get a better grasp of the unemployment rate. He said official statistics do not capture migrant workers, precisely the population most affected by the recent surge in lay-offs. Wang said the lack of useful statistics is a serious problem that affects the government s ability to make decisions. ¶3. (SBU) Economist Zhang Juwei, Deputy Director of CASS?s Institute of Population and Labor Economics, told Laboff January 14 that MOHRSS has in fact been working since 2005 to improve its unemployment statistics, at least in urban areas, through household surveys, but has not made any of the data public or available to Chinese scholars. Zhang said that the National Bureau of Statistics annual urban household survey provides the best estimate available of urban unemployment (5-6% in the past two years,) but only once a year. Zhang also questioned the relevance of unemployment statistics altogether. He said migrant workers who lose their jobs and return to farming would not be classified as unemployed under the International Labor Organization definition. Zhang said data on the industrial output growth is more important, and for late 2008, he described industrial output growth figures as alarming. ¶4. (SBU) Zhang was optimistic that the Central government?s fiscal and monetary stimulus policies would help bring growth back on track by the second half of ¶2009. He said that rural economies are growing rapidly, and that with increased infrastructure spending, they can potentially absorb many returning migrants. Zhang did not see unemployment among college students as a serious problem, although he said the government felt a political need to show it was taking action. The government s recently announced policies to promote employment, including incentives to prevent help businesses retain staff, job placement programs for university graduates, and vocational training for migrant workers may actually do some good, Zhang noted, but are only short-term measures. Zhang said he believes the main purpose of these policies is to defuse urban discontent and keep migrants in rural areas until the economy recovers. For the long-term, the government knows it must do more to promote domestic consumption, including by building up China's social safety net, Zhang emphasized. To test whether its policies are appropriate and effective, the government will need better labor statistics, Zhang said. PICCUTA