China faces the challenge of post-coronavirus recovery, employment and Hong Kong

Text by: Stéphane Lagarde Follow

Two months late, the session of the National People's Congress opened this Friday, May 22 in Beijing. The CCP's annual political meeting is an opportunity to display an image of unity and power in the face of America by Donald Trump and part of the European countries, very affected by the coronavirus pandemic. Among the major challenges of this parliamentary session: the revival of the economy and the very sensitive issue of employment and in particular the issuance of a state loan of 1,000 billion yuan announced by the Prime Minister.

Publicity

With our regional correspondent ,

The image of these 5,000 Chinese Communist Party delegates, certainly masked, but who came from all the Chinese provinces and gathered in Tiananmen Square for these two sessions of the Chinese Parliament , marks Beijing's victory against the virus. The Chinese People's Political Consultative Conference on May 21 and the National People's Congress on Friday May 22 are an opportunity for the regime to show its leadership in this new battle for growth.

The engine of the second economic power stopped for almost three months. The confined workers demonstrated less than last year, but the social discontent has not disappeared said Eric Sautedé, researcher at the China Labor Bulletin  and contributor to the Planet Labor website .

“  Social discontent, we read it especially on social networks and in the measures that have been taken by the government. There have been more than 90 measures taken by the government since the end of January to respond precisely to this social discontent. So these are measures primarily intended for companies, but it is also intended for people, employees, workers. With many things that have been put in place for migrant workers who represent 291 million people. We will have to see how it will translate concretely.  "

For this researcher, we see, via comments on social media, that the discontent and social concerns have not disappeared. But, in terms of demonstrations, walkouts and factory occupations, there is obviously much less than over the same period last year.

“  The China Labor Bulletin reports 148 movements compared to nearly 480 at the same time last year. They are mainly found in services, while demonstrations and pickets usually concern the construction sector at more than 40%. Because of the stopping of the economy which stopped, one does not read this social discontent with the same indicators.  "

Events in the service sector

More than a third of the protests in China in recent weeks have concerned the service sector with bankruptcies and threatened jobs.

The China Labor Bulletin team cites in particular the case of taxis. In several megalopolises, the drivers demonstrated against the companies which continued to require the rent of vehicles whereas the cars did not run any more because of containment measures.

Same concern in the hotel sector. He Juan is 32 years old, she worked for an establishment located in the hutong , the old alleys of Beijing. Due to the lack of tourists, her hotel had to close two weeks ago.

“  I was employed by a hotel with a courtyard in the Dongcheng district. We failed to survive during the epidemic due to the lack of resources and support. My hotel will not reopen. This worries me because my opportunities on the job market are very limited at the moment. All sectors have been affected by the epidemic. "

Most companies do not make money, and therefore they do not hire explains He Juan:  " These next weeks will be very difficult, and unfortunately, I think it will go even beyond. Some people hope it will work out in July, but July is diploma season. There is a lot of competition for positions. This year is going to be difficult for those like me who are looking for a job.  "

A rising unemployment rate

The employment issue is being watched as "soy milk on fire" by the Chinese government. The unemployment rate rose to 6% in April, that's a lot for China, and it's official unemployment.

“  The questions of employment and unemployment are much more acute this year. We have unemployment which rose to 6.2% before falling to 5.9 % then 6% today, explains Éric Sautedé . There is a real concern of the state apparatus about this, because you should know that the official unemployment figures are based on studies carried out on 31 main cities. So we have some of the job seekers who go under the radar in small towns and peri-urban centers. There have been several independent estimates made notably by the economic magazine Caixin , according to which China today has 70 to 80 million unemployed, including 50 million in services. This would mean that we would be much closer to 10% unemployment in large urban centers.  "

If we take into account underemployment, we would even see 20 or 25% unemployment, said this researcher in the China Labor Bulletin . Knowing that the manufacturing sector has not yet been impacted, since the aid from the Chinese government and in particular the repayment of unemployment protection has helped, as in other countries, to maintain employment artificially.

“  So we should have more figures in the weeks to come. And unemployment insurance doesn't cover everyone. Only 50% of urban workers are covered, only one fifth of migrant workers are covered. The third problem is the young entrants, 9 million young graduates who will find themselves on the job market, which has always been very hard in China for several years, and which will be even more so this year.  "

The country will drop its deficit this year to 3.6% of GDP (against 2.8% last year) thus putting a brake on its debt reduction policy to support an economy in distress. The country's deficit will thus increase by 1 trillion yuan compared to last year, said Li Keqiang. China has not had a budget surplus since 2007. The Chinese Premier also announced the issuance of a state loan for the amount of 1000 billion yuan. "  This is an exceptional measure limited to an exceptional period  , "noted Li Keqiang, adding that the total of 2,000 billion yuan would be"  transferred in full  "to local governments to support employment.

► Read: Coronavirus: in China, concerns for growth and jobs

Ensuring the social stability of the country

The world according to Covid-19, it is therefore these rising unemployment figures including in China. But figures that are still relatively low compared to those measured in Europe, but this still worries the CCP delegates meeting in Beijing. This worries them first because unemployment insurance is far from affecting everyone in China. Among the measures expected during this session is support for the fight against extreme poverty. The objective of the Chinese president is to reach a “ society of average ease  ” with a domestic demand, engine of the growth. The domestic consumption accounts for 40% of Chinese GDP today.

The pandemic has dampened this ambition, employment is threatened, including in services. There are thus 13.8% unemployed among young graduates. A real time bomb for Chinese power according to Joe Mazur, analyst at Trivium Chinaalyst , a think tank based in Beijing.

"  Nothing scares the Communist Party more ," he said, " than the prospect of tens of millions of unhappy unemployed people, who could act as a major destabilizing force for the country. However, the basis of Chinese policy is social stability. Economic growth and job security are therefore major elements of the puzzle. All the signals therefore indicate that the Chinese government will stay the course by increasing its support for sectors in difficulty with targeted measures. About 20 million migrant workers in China lost their jobs during the recession in 2008 and 2009. Here, there is talk of an even deeper slowdown. This is why the question of unemployment is so worrying in China.  "

Difficult in this context to maintain the image of stability that is supposed to embody this meeting of party delegates in Beijing. Other measures should complement the arsenal of recovery during this congress. But the measures are expensive, especially for provincial governments. So these are fine adjustments that should be decided during "  Lianghui  ", these two parliamentary sessions. China no longer has the reserves of 2008 and apart from this discontent to be mastered on the domestic front, Beijing must also face increased hostility abroad.

The question of national security

No 2020 growth target and defense spending up 6.6%, there was much talk of stability in the opening speech of the Chinese Premier on Friday morning. Li Keqiang also raised the issue of Hong Kong; the central government is due to table a resolution on Friday on a new national security law for the special administrative region.

This resolution whose contours have leaked, is the real bomb of this parliamentary session post Covid-19. Beijing intends to take advantage of the pandemic to try to eradicate this thorn in the side that has become the special administrative region. For months now, the Chinese apparatus has faced massive resistance from the Hong Kong population, opposed in the streets and at the polls to the introduction of this national security law which applies everywhere in China, except in Hong Kong.

Communist leaders seem to have lost patience and visibly doubt the ability of the Hong Kong Legislative Council (LegCo) to promulgate article 23 of the city's basic law, which was withdrawn in 2003 and which, according to Beijing, would proscribe activities deemed to be secessionist and subversive as well as any foreign interference in the territory. However, it is indeed a "national affair" and not a Hong Kong affair, insists on the People's Daily .

This Friday, the Prime Minister wanted to be reassuring. An enforcement mechanism for national security in the special administrative region must be set up, insisted Li keqiang, while wanting to be reassuring: The central government continued to implement "  with precision  " the "  one country, two systems  ”and the“ Hong Kong people ruling Hong Kong  ” principle  . This principle, having been omitted in the report of the president of the Chinese People's Political Consultative Conference which opened on Thursday, May 21.

But, for many observers, this legal framework aims to put an end to the Hong Kong exception. The resolution to allow the People's National Assembly to vote on this new national security law, before the assembly's standing committee comes to validate it by the end of August, before the elections of representatives of LegCo. The head of government also called for the rejection of separatist activities in Taiwan and for the defense of the " one China  " principle  .

► Read: Coronavirus: China, from denial to pandemic

Newsletter Receive all international news directly in your mailbox

Follow all international news by downloading the RFI application

• China
• Coronavirus
• Employment and Work
• Economy

On the same subject

Today's debate

Can the will of Chinese power be challenged?

Tsai Ing-wen does not want to "downgrade" Taiwan and wants dialogue with Beijing

Coronavirus: unprecedented contraction of China's GDP, down 6.8% in the first quarter