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Renmin University of China: the U.S.-Sino Trade War’s Impact on China’s Employment

On December 13, 2019, the School of Applied Economics at Renmin University of China published a report called, “An Analysis of the Impact of the Sino-U.S. Trade War on Employment.” The analysis surveyed 800 companies in three well developed provinces in China, including Guangdong, Fujian, and Zhejiang. There was a burst in exports in early 2018 after the U.S. announced that it would increase tariffs. Then a year later, the exports dropped significantly.

However, unemployment did not increase sharply. The analysis reported that many local governments have provided policies to keep the employment rate stable. For example, they refunded the company’s social security payments if it did not lay off employees, offered employment subsidies, or deferred the increase in the minimum wage. Some companies also reduced their employee’s work hours instead of reducing the employee headcount.

The report called this “sacrificing employment quality for a temporary stabilization of employment, or a hidden unemployment. If the U.S. continues to increase tariffs to the point that it forces companies to stop manufacturing, then many companies will take the staff reduction option.

The report also showed that, though the trade war created challenges to companies, the companies’ largest pressure came from within China; financing, environmental protection, land, and other costs are too high for companies to bear. Thus, even if there were no trade war, companies would still be struggling.

Source: website, December 16, 2019