Is China's unemployment rate 4 times higher than the official one?
While we would be the last to accuse China of lying about anything - and Jack Dorsey would agree - a Chinese securities brokerage may have been foolish enough to admit the truth about China's dismal economic reality... followed by promptly retracting an analyst report Monday that put the country’s real jobless rate above 20%, far greater than the official number.
According to an April 24 report by analysts from Shandong-based Zhongtai Securities, as many as 70 million people could have lost their jobs due to the economic fallout from the coronavirus pandemic, translating into an actual unemployment rate of around 20.5%. The surge in unemployment, according to Bloomberg which saw the report, was due to the outsize impact of the pandemic on services and small businesses, which provide the bulk of job opportunities, they said.
"The urban surveyed unemployment rate is obviously flawed in depicting the unemployment situation, because of China’s special condition that there is a very large group of migrant workers and that the urban surveyed unemployment rate couldn’t truly reflect the employment situation of migrant workers," the analysts admitted.
There were about 50 million fewer working migrant workers in the first quarter compared to last year, part of whom were not included in the survey, according to the 11-page original report.
The problem: if accurate, this means that China is not only lying about the source of the coronavirus, and the number of casualties, but also about its unprecedented fallout on the economy. And to preserve confidence, Beijing is pretending that tens of millions of workers are employed when they are, in fact, jobless.
The official unemployment rate was 5.9% in March, down from the "record-high" 6.2% in the first two months of the year, according to data from the National Bureau of Statistics, but of course that number is fabricated just like everything else in China. Like every other economic "data" point, the employment reading has been goalseeked in a tight range of around 5% since the series was first introduced in 2016, similar to GDP which had barely budged more than 0.1% vs the consensus number until the coronacrisis.
In any case, telling the truth was a huge mistake because just like everything else, in mainland China it is verbotten for economists to critique the official job data, a topic of extremely political sensitivity to the Communist Party leadership, especially if the truth is that China is this close to the social disorder that results from tens of millions of jobless people.
And sure enough, almost immediately after the report was published, it became inaccessible according to Bloomberg. One of the report’s authors, Zhang Chen, said by phone that it had been retracted: "Zhongtai’s attitude is that we should go by the official figures for unemployment," Zhang said, confirming indirectly that China is lying about the official data and will censor anyone who dares to tell the truth.