How the Covid-19 crisis changed China’s economy

Beijing will be forced to pursue new avenues of growth amid a labor market on the move

China was the first country to be affected by the Covid-19 crisis and took unprecedented lockdown measures that led to a historic decline in growth of at least 6% in 2020.

But in the first half of 2021, the world’s second-largest economy mounted a strong recovery. Still, the pandemic has led to lasting changes in the labor market which may force China to pursue new avenues for growth.

In the hospitality and export industries, companies were forced to lay off staff or delay their return to work in 2020.

The delivery sector, on the other hand, has been growing continuously for a number of years now and has recruited en masse during the pandemic, with many workers who lost their jobs in other sectors turning instead to more flexible roles as couriers and drivers.

Rural migrants have been the main architects of China’s remarkable growth during the past three decades, accounting for a third of the country’s more than 800 million workers. For the first time since 2008, they have decreased from 290.8 million in 2019 to 285.6 million in 2020.

According to some surveys, rural migrants are thought to have returned to their original roles when businesses began to recover. But others, many of who returned to their hometowns to mark the Lunar New Year, never came back, owing to administrative constraints and later a lack of opportunities.

Migrant workers

By the end of July 2020, there were over 13 million migrant workers employed locally.

Alongside those who became farmers or were taken on by companies, 5% started making local products and selling them directly via live-streaming. Of course, that eroded the Chinese model of modernization, which was underpinned by cheap and easily exploitable rural labor in towns and cities.

In China, as elsewhere, the position of women in the job market has deteriorated, with the pandemic only serving to accentuate the steady decline in their rate of employment.

It had already dropped from 80% in the 1980s to 60% in 2019. In cities, family members have once again been called upon to care for children and the elderly – a task normally entrusted to migrant women.

While some mothers praise the strengthening of family ties resulting from the lockdown, others have reported heightened levels of anxiety and an excessive physical and mental burden.

The Covid-19 pandemic has created employment turmoil. Photo: Flickr

For upper-class women, leaving the job market leads to financial dependence on their husbands, who usually earn a salary that is sufficient to maintain the household’s standard of living.

Yet for working-class women, the pandemic has only reinforced the precariousness of the situations in which they already found themselves.

Other vulnerable groups include young graduates entering the job market. The number is expected to reach an unprecedented peak of 9.09 million in 2021 – an increase of 350,000 compared to 2020.

The pandemic has made it even more difficult since large numbers of graduates from last year have still to find employment.

Many of them are preparing to continue their studies or to take the entrance exams for the civil service in an attempt to delay walking into a hostile labor market.

Young graduates

A survey conducted in Hunan province estimated that 37.5% of young graduates intended to set up their own businesses, a move encouraged by the authorities. More than 20% planned to continue their studies while 10.5% aimed to take civil service exams.

The competition for jobs is all the more fierce given that students who had left to study and work abroad have been returning in droves since mid-2020 when Covid-19 intensified in North America and Europe.

The pandemic has confirmed what a general slowdown had already been indicating for several years – China is at the end of a cycle and must find new drivers for its growth.

Also, we can assume that the health and geopolitical context will stem the flow of Chinese students traveling abroad in the future.

Difficulties that potential host countries experience in dealing with Covid-19 and international tensions could result in wealthy families deciding not to send their children to Australia, the United States or Europe.

As China becomes more powerful on the international stage, this process is likely to lead, in the long run, to the return of its economy and its society back to its own territory.

Gilles Guiheux, Professeur, socio-histoire de la Chine, CESSMA (UMR 245), Université de Paris; Guo Ye, Doctorante au Centre d’études en sciences sociales sur les mondes africains, américains et asiatiques (CESSMA), Université de Paris; Ke Huang, Doctorant en sociologie au Laboratoire de Changement Social et Politique (LCSP), Université de Paris; Li Jun, Doctorante au Centre d’études en sciences sociales sur les mondes africains, américains et asiatiques (CESSMA), Université de Paris; Manon Laurent, Doctorante au Centre d’études en sciences sociales sur les mondes africains, américains et asiatiques (CESSMA), Université de Paris, and Renyou Hou, Anthropologue, postdoctorant de la Fondation Chiang Ching-kuo, au LESC (Laboratoire d’ethnologie et de sociologie comparative), Université Paris Nanterre – Université Paris Lumières.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.