Overview of Current Labour Market Conditions in China
Submitted by:
SEPI — The Social and Economic Policy Institute
Flat A, 15/F, Wing Wong Commercial Building, 557-559 Nathan Road, Yaumatei, Kowloon,
Hong Kong
Tel: 852-23849373
Fax: 852-23849057
http://www.sepi.org/
Posted to GPN on January 14, 2002.
Overview of Current Labour Market Conditions in China
China has achieved extremely rapid economic growth throughout the 1990s in a context of
stable but low population growth. Although economic growth rates have slowed down
somewhat in recent years, they are still remarkable when compared to most developed or
developing countries.
China is increasingly linked to the global market economy and is itself becoming a market
economy. In 1991, Deng Xiaoping inspected the special economic zones in southern
China and stressed that “development is the only hard and fast principle”, thus liberating
investors from the depressing and stagnant atmosphere that had prevailed after the
Tiananmen massacre in 1989. Radical economic liberalization across the country in 1992-
1993 attracted a large quantity of international capital and boosted China’s economy, but
this also encouraged speculation in real estate and increased inflationary pressures. Yet
motivated by the implementation of a “soft landing” in the mid-1990s using macroeconomic
controls, the state decided to carry out comprehensive reforms in the direction of a market
economy. This included further reform of state-owned enterprises, social services, and
social security The result has been insufficient domestic demand.
Since 1998 the Chinese government has adopted pro-active fiscal policy to counter the
trend of reduced growth rates. The principal measures have included issuing long-term
bonds to support public construction works, increasing staff wages in administrative units
or institutional agencies, and cutting taxes to stimulate investment and consumption. Such
expansionary policies seem to have contributed to an increased growth rate in the last
year, Yet growing income