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Decreasing Employment Elasticity, Informalizing Labor Market and Ownership in China Andong Zhu Tsinghua University, Beijing, China Nairobi, 2007.01.

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Presentation on theme: "Decreasing Employment Elasticity, Informalizing Labor Market and Ownership in China Andong Zhu Tsinghua University, Beijing, China Nairobi, 2007.01."— Presentation transcript:

1 Decreasing Employment Elasticity, Informalizing Labor Market and Ownership in China Andong Zhu Tsinghua University, Beijing, China Nairobi, 2007.01

2 Outline Introduction Decreasing Employment Elasticity Informalizing Labor Market Ownership Changes in the Chinese Economy Conlusion

3 Introduction Unsustainable trends in the Chinese Economy() == Consumption rate is too low == Inequality/poverty == concentration of wealth/low labor share ==unemployment/informalizing employment

4 Chinas Changing Economic Structure, 1981-2003 (%) 1981- 1985 1986- 1990 1980- 1990 1996- 2000 2001- 2003 Share of GDP (expenditure approach): a Private Consumption52.251.046.547.245.1 Public Consumption14.012.512.812.212.8 Fixed Capital Formation28.129.233.735.039.5 Exports b 7.912.719.020.125.7 Net Exports-0.3-0.41.03.02.3 Contribution to GDP growth: a Private Consumption53.647.544.451.830.4 Public Consumption12.411.211.016.39.5 Fixed Capital Formation31.221.938.740.057.9 Exports b 12.722.823.626.548.7 Net Exports-8.39.21.24.01.4

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7 Decreasing Employment Elasticity Employment Growth value-added Growth employment Elasticity 1980-1990 Primary Industry2.86.20.45 Secondary Industry5.99.50.62 Tertiary Industry7.912.20.65 Total4.19.30.44 1990-2000 Primary Industry-0.83.8-0.21 Secondary Industry1.613.50.12 Tertiary Industry5.19.10.56 Total1.110.10.11

8 Graduates from higher education institutes, employment ratio, employment(10,000 or %) 33 8 Total GraduatesEmployment Ratiounemployed 200010786.39%30 2001115.0289.40%34.5 200214585.00%52 200321283.00%70 200428073.00%75 2005338

9 Informalizing Labor Market

10 Ownership Changes in the Chinese Economy Shrinking SOE Sector Increasing Private Enterprises Share Increasing Foreign Sector

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12 Share in Industry Output by Ownership (%)

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14 Conclusion Dangers in the Chinese Economy: re- colonizing Foreign Capital Controls the Economy; Foreign Capital Controls the Economy; Locked at the low-Ladder of the World Economy Locked at the low-Ladder of the World Economy Strengthen the State and Empower the Working Class

15 Chinas Basic Economic Statistics, 1981-2001 (percent) 6th Five Year Plan (1981-85) 7th Five Year Plan (1986- 90) 8th Five Year Plan (1991-95) 9th Five Year Plan (1996-00) 1981- 1995 1996- 2001 Real GDP growth (Official)10.787.9212.008.2610.238.10 Real GDP growth (Maddison) 1 8.875.738.686.31 2 7.76 Inflation rate 3 3.647.2612.450.607.780.50 Energy consumption growth4.995.205.86-0.435.350.16 Gross domestic savings (% of GDP)34.0435.9840.7641.2636.9341.11 Investment (% of GDP)34.0836.8639.6437.6436.8637.69 State Investment (% of Gross investment) 67.0964.9161.1852.5164.3951.64 State Investment (% of GDP) 22.8723.9224.2519.7623.7419.47 Consumption (% of GDP)66.2463.5259.3859.3463.0559.42 Government Expenditure (% of GDP)23.2918.1113.4314.3418.2815.24 Net Exports (% of GDP)-0.30-0.311.513.460.303.29 Foreign direct investment (% of GDP)0.330.904.314.391.854.29 FDI (% of gross investment)0.952.4910.6211.584.6911.33 Household final consumption growth 4 11.285.8810.017.789.066.81 General government consumption growth 4 11.666.9011.408.749.999.19 Gross consumption growth 4 11.346.0210.267.969.217.30 Gross Investment Growth 4 19.705.7023.159.9816.1810.48 State Investment Growth 4 15.365.5617.798.2512.907.99

16 Chinas Basic Economic Statistics, 1981-2001 (percent) 6th Five Year Plan (1981- 85) 7th Five Year Plan (1986- 90) 8th Five Year Plan (1991- 95) 9th Five Year Plan (1996-00) 1981-1996- 19952001 Government budget Balance(% of GDP) -0.22-0.79-1.03-1.53-0.68-1.71 New government debt(% of GDP)1.51.892.393.931.934.08 SOE output share in industry output71.357.8945.1929.0358.13 SOE employment growth2.342.851.72-6.152.3-6.08 City collective enterprise employment growth 6.641.33-2.33-13.141.88-13.26 Staff and workers employed by manufacturing sector, growth 5 3.22.810.51-9.422.17-9.03 total Staff and workers, growth 5 3.432.621.19-5.292.41-5.1 Total employment growth3.325.5111.153.281.18 Share of employment in formal sector97.8993.1281.0260.6790.6858.07 Change of formal sector employment share in total employment -0.55-2.8-0.84-5.93-1.4-5.54 Gini coefficient26.1534.8138.540.3


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