decreasing employment elasticity, informalizing labor market and ownership in china
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Decreasing Employment Elasticity, Informalizing Labor Market and Ownership in China. Andong Zhu Tsinghua University, Beijing, China Nairobi, 2007.01. Outline. Introduction Decreasing Employment Elasticity Informalizing Labor Market Ownership Changes in the Chinese Economy Conlusion. - PowerPoint PPT PresentationTRANSCRIPT
Decreasing Employment ElDecreasing Employment Elasticity, Informalizing Labor asticity, Informalizing Labor Market and Ownership in CMarket and Ownership in C
hinahinaAndong ZhuAndong Zhu
Tsinghua University, Beijing, ChinaTsinghua University, Beijing, China
Nairobi, 2007.01Nairobi, 2007.01
OutlineOutline
IntroductionIntroduction
Decreasing Employment ElasticityDecreasing Employment Elasticity
Informalizing Labor MarketInformalizing Labor Market
Ownership Changes in the Chinese EconoOwnership Changes in the Chinese Economymy
ConlusionConlusion
IntroductionIntroduction
Unsustainable trends in the Chinese EconUnsustainable trends in the Chinese Economy() omy() == Consumption rate is too low == Consumption rate is too low == Inequality/poverty == Inequality/poverty == concentration o== concentration of wealth/low labor sharef wealth/low labor share==unemploymen==unemployment/informalizing employment t/informalizing employment
China’s Changing Economic Structure, 1981-2003 (%)China’s Changing Economic Structure, 1981-2003 (%)
1981-1985
1986-1990
1980-1990
1996-2000
2001-2003
Share of GDP (expenditure approach):a
Private Consumption 52.2 51.0 46.5 47.2 45.1
Public Consumption 14.0 12.5 12.8 12.2 12.8
Fixed Capital Formation 28.1 29.2 33.7 35.0 39.5
Exportsb 7.9 12.7 19.0 20.1 25.7
Net Exports -0.3 -0.4 1.0 3.0 2.3
Contribution to GDP growth:a
Private Consumption 53.6 47.5 44.4 51.8 30.4
Public Consumption 12.4 11.2 11.0 16.3 9.5
Fixed Capital Formation 31.2 21.9 38.7 40.0 57.9
Exportsb 12.7 22.8 23.6 26.5 48.7
Net Exports -8.3 9.2 1.2 4.0 1.4
China's Capital Productivity andRate of Return on Capital
0
0.1
0.2
0.3
0.4
0.5
0.6
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
0
0.04
0.08
0.12
0.16
0.2
0.24
Capital Productivity Marginal Capital ProductivityIndustrial Profit Rate (right scale)
China's Investment-Output Ratioand Economic Growth Rate
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
Investment Ratio Growth Rate (right scale)
Decreasing Employment ElasticityDecreasing Employment Elasticity
Employment Growth
value-added Growth
employment Elasticity
1980-1990
Primary Industry 2.8 6.2 0.45
Secondary Industry 5.9 9.5 0.62
Tertiary Industry 7.9 12.2 0.65
Total 4.1 9.3 0.44
1990-2000
Primary Industry -0.8 3.8 -0.21
Secondary Industry 1.6 13.5 0.12
Tertiary Industry 5.1 9.1 0.56
Total 1.1 10.1 0.11
Graduates from higher education inGraduates from higher education institutes, employment ratio, employstitutes, employment ratio, employ
ment(10,000 or %)ment(10,000 or %)33
8
Total Graduates Employment Ratio unemployed
2000 107 86.39% 30
2001 115.02 89.40% 34.5
2002 145 85.00% 52
2003 212 83.00% 70
2004 280 73.00% 75
2005 338
Informalizing Labor MarketInformalizing Labor Market
0
5000
10000
15000
20000
25000
30000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
EMP- CI TY- SOEEMP- STF&WRKEMP- CI TY
Ownership Changes in the Chinese Ownership Changes in the Chinese EconomyEconomy
Shrinking SOE SectorShrinking SOE Sector
Increasing Private Enterprises’ ShareIncreasing Private Enterprises’ Share
Increasing Foreign SectorIncreasing Foreign Sector
The Share of I ndustry Output by Ownershi p
0
10
20
30
40
50
60
70
80
90
100
1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999
Year
SOECLTI DVOtherSOE+CLT
Share in Industry Output by Share in Industry Output by Ownership (%)Ownership (%)
54.61 35.63 7.4856.17 32.99 5.5551.52 35.07 6.3247.01 34.02 9.8337.34 37.72 13.6933.97 36.59 15.1436.32 39.39 9.1531.62 38.11 11.728.24 38.41 9.01
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Forei gn Owned SOE Col l ect i ve Domest i c Pr i vate
Forei gn Enterpri ses' Share i n Chi na' s I nternati onal Trade (%)
0
10
20
30
40
50
60
70
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Year
EX + IM EXIM
ConclusionConclusion
Dangers in the Chinese Economy: re-Dangers in the Chinese Economy: re-colonizingcolonizing Foreign Capital Controls the Economy;Foreign Capital Controls the Economy; Locked at the low-Ladder of the World Locked at the low-Ladder of the World
EconomyEconomy
Strengthen the State and Empower the Strengthen the State and Empower the Working ClassWorking Class
China’s Basic Economic Statistics, 1981-2001 (percent)China’s 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) 10.78 7.92 12.00 8.26 10.23 8.10
Real GDP growth (Maddison)1 8.87 5.73 8.68 6.312 7.76
Inflation rate3 3.64 7.26 12.45 0.60 7.78 0.50
Energy consumption growth 4.99 5.20 5.86 -0.43 5.35 0.16
Gross domestic savings (% of GDP) 34.04 35.98 40.76 41.26 36.93 41.11
Investment (% of GDP) 34.08 36.86 39.64 37.64 36.86 37.69
State Investment (% of Gross investment)
67.09 64.91 61.18 52.51 64.39 51.64
State Investment (% of GDP) 22.87 23.92 24.25 19.76 23.74 19.47
Consumption (% of GDP) 66.24 63.52 59.38 59.34 63.05 59.42
Government Expenditure (% of GDP) 23.29 18.11 13.43 14.34 18.28 15.24
Net Exports (% of GDP) -0.30 -0.31 1.51 3.46 0.30 3.29
Foreign direct investment (% of GDP) 0.33 0.90 4.31 4.39 1.85 4.29
FDI (% of gross investment) 0.95 2.49 10.62 11.58 4.69 11.33
Household final consumption growth4 11.28 5.88 10.01 7.78 9.06 6.81
General government consumption growth4 11.66 6.90 11.40 8.74 9.99 9.19
Gross consumption growth4 11.34 6.02 10.26 7.96 9.21 7.30
Gross Investment Growth4 19.70 5.70 23.15 9.98 16.18 10.48
State Investment Growth4 15.36 5.56 17.79 8.25 12.90 7.99
China’s Basic Economic Statistics, 1981-2001 (percent)China’s 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-
1995 2001
Government budget Balance(% of GDP)
-0.22 -0.79 -1.03 -1.53 -0.68 -1.71
New government debt(% of GDP) 1.5 1.89 2.39 3.93 1.93 4.08
SOE output share in industry output 71.3 57.89 45.19 29.03 58.13
SOE employment growth 2.34 2.85 1.72 -6.15 2.3 -6.08
City collective enterprise employment growth
6.64 1.33 -2.33 -13.14 1.88 -13.26
Staff and workers employed by manufacturing sector, growth5 3.2 2.81 0.51 -9.42 2.17 -9.03
total Staff and workers, growth5 3.43 2.62 1.19 -5.29 2.41 -5.1
Total employment growth 3.32 5.51 1 1.15 3.28 1.18
Share of employment in formal sector 97.89 93.12 81.02 60.67 90.68 58.07
Change of formal sector employment share in total employment
-0.55 -2.8 -0.84 -5.93 -1.4 -5.54
Gini coefficient 26.15 34.81 38.5 40.3