President Donald Trump made fun of China in his first term, stating that his tariffs had caused the loss of five million jobs in that country. In a 2019 tweet, he said that his commercial policies had put China “against the strings.”
Economists disagreed a lot about the scope of the damages caused by Trump’s tariffs, but the message stressed the importance of employment for the Chinese economy, dependent on exports.
Four months after Trump’s second term, the United States and China are negotiating tariffs again, and the Chinese labor market, especially jobs in factories, is in the foreground. This time, the Chinese economy is going through difficulties, which makes its workers more vulnerable. A persistent real estate deceleration, which worsened during the pandemic caused by COVID, has ended jobs and has impoverished the population. The recent graduates of the University are incorporating into the active population at a time when the unemployment rate among young workers is two digits.
“The situation is clearly much worse,” said Alicia Garcia-Herrero, chief economist for the Asia region and the Pacific of the Natixis Investment Bank.
He said that, as employment opportunities disappear in other sectors, the importance of conserving the 100 million jobs in the China manufacturing sector has increased.
This month, Chinese and American officials agreed to temporarily reduce the punitive tariffs that had become each other while trying to avoid the return to a total commercial war that would threaten to undermine both economies.
In a research report, Natixis said that if US tariffs remained at their current levels of at least 30%, exports to the United States would fall to half, which would cause a loss of up to six million jobs in the manufacturing sector. If the commercial war resumes again, the loss of jobs could amount to nine million.
The Chinese economy has fought to recover from pandemia, expanding more slowly than in the years of Trump’s first mandate, when growth exceeded 6% per year. Although the Chinese government has said that it aims to growth of around 5% this year, many economists have predicted that the real figure will not reach those levels.
At the beginning of 2018, China said that its urban unemployment rate had fallen to minimums that had not been seen in 15 years and that the country had created a record number of new jobs. Since then, the energetic measures of the Government and the strictest regulations have submitted industries such as online technology and education, a former flourishing sectors that created lots of new jobs.
During those years, unemployment increased especially among young people. The unemployment rate among young people aged 16 to 24 was 15.8% in April, an improvement compared to the previous month. However, the figure is expected to increase when 12 million new graduates of the university join the active population this year.
In 2023, when the youth unemployment figures reached the record of 21.3%, the Chinese government suspended the publication of the figures. At that time, an outstanding economist said the real figure was closer to 50%. Beijing began to distribute the figures again last year with a new methodology that reduced the unemployment rate.
At the same time, even those who have work are in a more precarious situation. Less and less companies that offer full -time jobs, and instead resort to temporary workers for services such as food distribution and manufacturing. Although these jobs offer workers more flexibility, they are usually worse paid and provide few labor protections or benefits.
The United States, meanwhile, has its own inconveniences. The American industry depends deeply on critical and mineral metals largely controlled by China, while an interruption of Chinese goods increases the risk of inflation and could contribute to a shortage of harmful products.
If negotiations are reduced to seeing which country is capable of supporting more economic difficulties, China has an advantage in the “resistance to the commercial war,” said Diana Choyleva, chief economist of Enodo Economics, a London research company focused on China. Beijing can placate the discontent for disturbances in the labor market more easily than American politicians can withstand anger on empty stores in stores, he said.
According to official data, in April, before the United States and China agreed to suspend the highest tariffs, the new requests for exports from China fell to their lowest level since 2022. Even in the period of one month, the very high tariffs had consequences on employment.
In Canton, the Chinese textile industry center had closed businesses when the orders of foreign buyers fell before the ultralevated tariffs were suspended. Many said that the drop in orders forced them to hire less workers.
Jane Hu, Shanghai’s office worker, said she lost her job last month, not because of Trump’s tariffs, but for China’s counterme about to raise tariffs on US imports at 125%.
He said that his former employer, a construction machinery company that depended on introducing machinery from the United States in China, could not afford tariffs, which far duplicate import costs.
This aggravated the problems that the company already faced due to the real estate deceleration. Sales decreased by 40%, which made dismissals inevitable.
At 33, Hu is worried about having too much experience for initial level positions. Many companies hesitate to hire women like her, married and without children, because they do not want to potentially cover the cost of maternity license, he said. The women of their age have a saying, he said: “We are old and faces. Why would a company choose us?”
He said he had only achieved two work interviews. To obtain additional income, Hu started driving from time to time for private transport services.
At the end of April, Yu Jiadong, senior official of the Ministry of Human Resources and Social Security of China, said the Government had prepared a series of measures to maintain stable employment, especially for Chinese exporters. He said Beijing would help companies maintain their workers and encouraged the unemployed to create companies.
With so much at stake, sensitivity around employment is greater. The owner of a factory in southern China, who asked not to be identified, said he had planned to say goodbye to personnel, but that he postponed it when the clients rushed to make orders after the tariff truce. A government official had told him that, if he needed to cut his template, he had to do it properly and discreetly not to create a stir.
Factories owners who use salaried workers are obliged by law to compensate them in case of dismissal, said Dongfang, founder of China Bulletin, who follows up for factoring closures and workers’ protests. Normally, they are required to pay a month of salary for each year of employment, which makes the dismissals such a expensive perspective that some factories close without prior notice and the owners disappear.
The work activity outside the manufacturing sector has contracted for more than two years, according to a monthly survey of industrial companies. The commercial war has made companies more suspicious, adding another worrying factor for university graduates looking for work.
“The current labor market is much worse than before,” said Laura Wang, 23, accounting student at Chongqing. Wang said that more than 80% of their classmates had difficulty finding work.
He said the market was especially hard for finance and accounting students. The few jobs and for practices that are available require much higher requirements. The agitation related to tariffs has made it unlikely that companies risk someone without a proven history.
“There are many uncertainties,” said Wang. “For newly unleaded graduates like me, the impact is even greater.”