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series on Shanghai. Unless they were counted in China’s official data series as manufacturing workers back in their home provinces, they also were missing from the official national manufacturing employment series that is compiled from provincial data.

Is China’s labor supply “inexhaustible”?

China is widely perceived to have an unending supply of poor laborers willing to work for low wages:

Right now China is, in many ways, the centripetal force of globalization— attracting capital and companies at an increasing rate; in the process, given its inexhaustible supply of cheap labor and surprisingly swift ascent up the technological food chain, it is rewriting the economics of scores of industries.63

Rawski, for example, refers to “China’s growing problems of unemployment and excess labour supply.”64 How big is China’s surplus labor force and what are the characteristics of these adults? Are they suitable and readily available to work in China’s manufacturing industries, or not?

China has sustained massive layoffs in its urban state-owned and collective manufacturing industries, as indicated by the sharp declines in their employment numbers in Table 1. “The shutdown of inefficient state-owned plants has cost China tens of millions of jobs, with more to go.”65 In addition, government employment has been steeply cut in recent years. The outcome is that in China’s urban areas, the unemployed and laid-off workers may be about 6-13 percent of the economically active population, and even higher in some important industrial cities,67 with some estimates of the true unemployment rate rising to 25 percent as some scholars attempt to include disguised unemployment.68 In China’s rust belt in the northeast, some cities are estimated to have actual unemployment rates approaching 40 percent of the labor force. China’s urban surplus workers include millions of middle-aged and older formerly employed workers who may or may not be suitable for the required work in manufacturing. Many have been forced to retire early, have left the labor force, and have lost heart, so they cease looking for work.69 Some never even tried to look for work because they feel that whatever might be available is beneath them. But there are also millions of young adults with a senior high school or equivalent level of education who are looking for their first or second job. This is a large pool of potential employees who are already in the cities. 66

The surplus labor force in China’s countryside is variously estimated in a huge range of 100-200 million.70 For example, “The unemployment rate in urban areas is estimated at more than 8 percent; there may be an additional 200 million jobless workers in the countryside.”71 According to some surveys, nearly a third of today’s rural labor force is surplus agricultural workers.72 As agriculture modernizes in China during the coming decades, hundreds of millions of agricultural workers will need other kinds of employment. 73

Chinese manufacturers have access to an almost unlimited supply of cheap labour. By some estimates, there are almost 200m underemployed workers in rural areas


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