The Truth about Chinese Unemployment Rates

SHANGHAI – Since 2002, China’s economy has undergone significant changes, including a shift from acceleration to deceleration of GDP growth. Yet the official urban unemployment rate, jointly issued by the National Bureau of Statistics (NBS) and the Department of Labor and Social Security, has remained remarkably steady, at around 4-4.1%. Since 2010, it has stood at precisely 4.1%. This is surprising, to say the least – and has led some to ask whether the NBS could be fudging the numbers.

The NBS is not lying; it simply lacks data. The unemployment rate that the NBS provides reflects how many members of the registered urban population have reported to the government to receive unemployment benefits. But, unlike in developed countries, China’s piecemeal unemployment insurance and underdeveloped reemployment programs weaken the incentive for people to seek assistance. As a result, the NBS unemployment figures are far from accurate.

China’s government has moved to remedy this, by carrying out urban unemployment surveys. But, despite having been collected a decade ago, those statistics have yet to be released.

In lieu of convincing official figures, some economists have taken matters into their own hands, using data from the urban household survey (UHS) to estimate the real unemployment rate. Extrapolating from UHS data gathered in six provinces, Jun Han and Junsen Zhang, for example, concluded that, in 2005-2006, Chinese unemployment stood at around 10%. Using UHS data from almost all of China, Feng Shuaizhang, Hu Yingyao, and Robert Moffitt calculated an average urban unemployment rate of 10.9% from 2002 to 2009 – the highest estimate ever produced.