Last updated: February 2, 2009 7:20 pm

Downturn causes 20m job losses in China

More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday.

By the start of the Chinese new year festival on January 25, 15.3 per cent of China’s 130m migrant workers had lost their jobs and left coastal manufacturing centres to return home, said officials quoting a survey from the agriculture ministry.

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The job losses were a direct result of the global economic crisis and its impact on export-oriented manufacturers, said Chen Xiwen, director of the Office of Central Rural Work Leading Group. He warned that the flood of unemployed migrants would pose challenges to social stability in the countryside.

The figure of 20m unemployed migrants does not include those who have stayed in cities to look for work after being made redundant and is substantially higher than the figure of 12m that Wen Jiabao, premier, gave to the Financial Times in an interview on Sunday. Speaking on a visit to the UK on Monday, Mr Wen said there had been signs at the end of last year the Chinese economy might be starting to recover.

In a speech at Cambridge University later, he warned that the global economy could face further problems. “The crisis has not yet hit the bottom, and it is hard to predict what other problems there will be down the path,” he said. Governments should avoid any policies that allowed them to “progress at the expense of others”, he added.

Mr Wen’s speech was interrupted by a protester who called him a “dictator” and threw a shoe at the stage – an act reminiscent of the Iraqi journalist who threw shoes at George W. Bush, former US president, at a press conference in Baghdad last year. Police said they had arrested the man.

Production in China’s manufacturing sector declined for the sixth successive month in January, according to Hong Kong brokerage CLSA, which said on Monday that its purchasing managers’ index hit 42.2, up marginally from December but well below the no-change mark of 50.

The CLSA survey showed that manufacturers shed jobs in January at the fastest rate since the survey began in 2004.

In the past decade, 6m-7m rural migrant workers a year have left the countryside to man the factories, construction sites and restaurants of booming cities.

According to a rough official calculation, one percentage point of Chinese gross domestic product growth creates about 1m jobs. In the fourth quarter, growth from a year earlier fell to 6.8 per cent and many economists believe Beijing will struggle to meet its target of 8 per cent growth this year.

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