China’s Middle Class Accounting for More Unemployed

Monday, March 23, 2009 7:44

China unemployed

When speaking on the economic ripples that are being felt in china, one will often hear that there is little to fear. that because the layoffs are primarily coming from the blue collar/ migrant sector, that the pain is not being felt in China’s largest cites, that everything will be fine. that consumer confidence will stay high, purchasing wil remain stable, and that this will in essence allow China to bounce back faster than others.

some of these underlying assumptions, are beginning to be tested, and while there are some who would like to point to a single number as a source for hope, my hope of a quick correction continue to be tempered by what I am hearing on the street and reading in the papers.

The recent article Middle class set to feel the pinch is yet another example, but perhaps more than others in the past, this one is more concerning to me as it is essentially showing that another one of fears is coming closer to reality…

A recent poll by Sina.com found that 26 percent of employees were “extremely anxious” about their jobs; another 35 percent said they were “worried”.

In another 2008 survey, 70 percent of respondents said the financial crisis had greatly affected their mental state; another 10 percent said they felt like they were “on thorns” over the possibility of losing their jobs.

“It’s no longer a question of job pressure,” said Lin Qiang. “Now it’s a question of survival.”

Now that the press is beginning to report that your average Zhou is worried about their jobs, and they are releasing statistics to show that consumer sentiment is tanking, it is just one more reason why we need to once again adjust our predictions downward and spend time thinking about what these numbers really mean and how to adjust business plans to prepare for what is surely NOT going to be a 2nd/ 3rd quarter recovery.

So, with that, what should we make of the numbers.

Going forward, what are the most important numbers to look at? What other measures would you be looking out for as a litmus for continued downside or a turnaround?

More importantly – what are the next set of ripples should we see layoffs, increased savings, etc? Futher closures at factories? Reduced materials imports? How far does it go???

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2 Responses to “China’s Middle Class Accounting for More Unemployed”

  1. Frank says:

    March 24th, 2009 at 12:41 am

    Rich,

    This is exactly my fear as well. Beijing Olympic Delusional Syndrome (BODS) kept people spending for a while but eventually the logical disconnect ended, and the switch to pessimism has been quick.

    It is definitely getting more and more nasty out there, because you have a whole generation of people who have known nothing but success, and who were brought up on the notion of an everlasting “Bright Future” for China. With so many companies on a complete hiring and travel freeze, the dashing of these high expectations is likely to feed the fires. The investment in infrastructure will help but it will not take the place of US, Japanese and European consumer spending.

    Try selling an apartment in China right now. You will get the sense of how it is from the silence. Or try renting out an apartment. Or move office and see how much cheaper it is …

  2. Rich says:

    March 24th, 2009 at 7:25 pm

    Hi Frank.

    How are things these days?

    The one thing I didn’t mention is that I have heard that some projects of urban unemployment are now in the 10-12% range.

    How scary is that!

    R