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Its miraculous gig economy is propping up jobs
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As China’s export machine sputters under the weight of 145% tariffs, jobs are at risk. Some 16m workers are involved in the production of goods bound for America, says Goldman Sachs, a bank. Nomura, another bank, projects a possible 5.7m job losses in the near term and 15.8m in the long run as the shock ripples through the economy.
China’s leaders are already yanking levers to soften the blow. At a Politburo meeting on April 25th, they vowed to increase rebates of unemployment-insurance payments for firms hit by tariffs. But there is another labour market saviour: the vast gig economy. Indeed, Donald Trump’s trade war could complete that sector’s metamorphosis from a freewheeling industry viewed with suspicion by the Communist Party, into the world’s largest state-approved e-market for labour, with a shadow welfare state.
The party is turning to the gig economy because it is vast: the state-controlled trade-union federation estimates there are 84m people relying on “new forms of employment”, including delivery services and ride-hailing. The government cites a broader category of 200m “flexible workers”, including the self-employed and part-time workers. Both figures far exceed the 54m jobs at state-owned enterprises in cities, and make up a big chunk of the 734m-strong workforce. One delivery firm, Meituan, uses 7.5m couriers who get paid $11bn a year. Drivers often describe their taxing work as guodu, a transitional job “to ferry over a stream”.
Mr Wan is typical. The 36-year-old looked for the highest paying job within reach and saw that food-delivery drivers could make 10,000 yuan a month. He criss-crosses Beijing on his scooter from 6am to 9pm each day. “Every penny matters right now,” he says. Couriers loom large in the public mind. “Upstream”, a recent film about a middle-aged programmer-turned-delivery-driver, put their ranks on the big screen.
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Happily for the party this huge gig economy is growing, despite trade clashes and years of sluggish consumer confidence. Meituan’s workforce, typically employed via third-party contracting firms, is 41% larger than in 2021 (see chart). In March its bosses said they expected healthy growth of both food and shopping delivery. The firm is forecast to increase its sales by about 15% annually until 2027. Similarly, the number of ride-hailing licenses exploded from 2.9m in 2020 to 7.5m in 2024 (see chart).
Even more helpfully for the party, an epic struggle for market share between rival firms means a hiring war is being unleashed amid the trade war. On April 21st JD.com, an e-commerce firm that is entering the delivery business, said it would take on 100,000 new riders by the end of July. The combination of price cuts for consumers and more labour costs has spooked investors who have sent share prices tumbling. But more jobs, low prices and low margins are exactly what the party wants.
The miracle-cure properties of the gig economy are leading to its political rehabilitation. In 2020 it was denounced as part of a “disorderly expansion of capital”. Leaders viewed the firms as “castles built on sand”, says Tilly Zhang of Gavekal Dragonomics, a consultancy. But the party has realised jobs and consumption matter, too. The pivot began in 2023, when Li Qiang, the prime minister, praised consumer-tech firms for their “increasingly prominent” role in demand and employment. Now the government is openly embracing the gig economy as a cushion for the economy.
That embrace is so fulsome that the government is even encouraging gig-economy companies to create what amounts to a shadow welfare system. In February JD.com offered social-security benefits to its drivers. Meituan says that it will “gradually provide” social security for its couriers starting with a pilot scheme in the second quarter of 2025. Desperate to impress, firms are investing in rest stations, meals and subsidies for drivers, “for the government to see”, says one economist.
What’s not to like? A huge question is who ultimately pays. Pensions and medical insurance sound great to workers, but are not if they come directly or indirectly out of their pay cheques. JD.com insists it will pay both the employer and employee’s premiums into a state-run scheme. Scepticism abounds on social media. Several drivers, when asked about the scheme, use the phrase, “the wool still comes from the sheep’s back”—nothing comes for free.
In the southern city of Quanzhou, where Meituan last month launched a pilot scheme to reimburse half of pension premiums for qualifying drivers, 30-year-old Mr Lai says he is not interested. Sitting on his scooter outside a mall, he says: “When we’re old, the workforce will be even smaller, and the pension contributions they pay will not be able to support my generation.”
If the social burden on the gig-economy firms grows too great, it may be difficult for them to cope financially, hence the share-price collapse. The state should protect the flexibility of gig workers and consider new ways to transfer income to them, warns the economist. Otherwise consumer-tech companies could disappear along with the drivers’ jobs, just as the trade war hurts manufacturing employment. In the long run technology also poses a threat to the job-creating qualities of the gig economy. Meituan is pioneering the use of delivery by autonomous vehicles and drones, which it says have completed 4.9m and 1.45m customer orders respectively.
Nonetheless the story of the gig economy is an example of how the trade war is forcing China’s rulers to adapt. They might love their vision of high-tech workers making semiconductors for the world. What they have instead is a low-tech army of people buzzing about on scooters and in cars delivering meals for instant munching by ravenous consumers. It keeps the show on the road. That is true for the drivers, too. After a year of delivery, Mr Lai says he is moving on. He is joining a relative who runs a factory in the eastern hub of Yiwu to sell goods on Amazon. He predicts the trade war will soon end. But if he is wrong he will be back on his bike.■
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WorldChina.css-v7aorn{margin-top:0.875rem;}.css-v7aorn +.eq1asik0{margin-top:3rem;padding-bottom:0;}.el1rg701+.css-v7aorn{margin-top:0;}.css-9ejc71{position:relative;border-bottom:0;border-top:0.0625rem solid var(–mb-colour-greyscale-london-85);color:var(–mb-colour-greyscale-london-35);}.css-9ejc71 .ebxshaw0{margin-top:0;}.css-9ejc71 >.e5z0ibw0>*{padding:var(–mb-spacing-md) 0;}.css-9ejc71 >.e5z0ibw0>*:nth-of-type(2){border-top:0.0625rem solid var(–mb-colour-greyscale-london-85);}@media (min-width: 37.5rem){.css-9ejc71 >.e5z0ibw0>*:nth-of-type(2){border-top:0;}}.css-9ejc71 >.e5z0ibw0 .e5z0ibw0{gap:var(–mb-spacing-sm);}.css-yb4x8x{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-items:stretch;-webkit-box-align:stretch;-ms-flex-align:stretch;align-items:stretch;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:flex-start;justify-content:flex-start;}@media (min-width: 37.5rem){.css-yb4x8x{-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;}}@media (min-width: 37.5rem){.css-yb4x8x{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}}@media (min-width: 37.5rem){.css-yb4x8x{-webkit-box-pack:end;-ms-flex-pack:end;-webkit-justify-content:flex-end;justify-content:flex-end;}}.css-1j1j36d{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-flex-wrap:wrap;-webkit-flex-wrap:wrap;-ms-flex-wrap:wrap;flex-wrap:wrap;row-gap:0.6rem;-webkit-column-gap:var(–mb-spacing-sm);column-gap:var(–mb-spacing-sm);}ShareReuse this content.css-169lzn0{position:relative;-webkit-align-self:auto;-ms-flex-item-align:auto;align-self:auto;display:none;}@media (min-width: 80rem){.css-169lzn0{grid-column-start:9;}}@media (min-width: 89rem){.css-169lzn0{grid-column-start:13;}}@media (min-width: 80rem){.css-169lzn0{grid-column-end:13;}}@media (min-width: 89rem){.css-169lzn0{grid-column-end:17;}}@media (min-width: 80rem){.css-169lzn0{grid-row-start:1;}}@media (min-width: 80rem){.css-169lzn0{grid-row-end:span 4;}}@media (min-width: 80rem){.css-169lzn0{display:block;}}.css-169lzn0:last-child::after{height:0;}.css-1y1zooy{display:inline;}.css-1y1zooy >*+*{margin-top:2rem;}.css-1y1zooy >*:only-child{margin-top:1.25rem;}.css-1y1zooy >*:last-child{position:-webkit-sticky;position:sticky;top:1.5rem;}.css-z2cag9{margin-top:6rem;}
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Edible rats are China’s latest live-streaming stars
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Cooking them on camera beats standing in a factory all day, and pays much better
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Is China justified in still calling itself a developing country?
The reasons are more about self-image than money
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American tariffs are starting to hammer Chinese exporters
But plenty of firms believe that the levies will not last
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Wanted: a senior producer/editor for our Drum Tower podcast
An opportunity to join the staff of The Economist
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China’s $38,000 baby formula
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Источник: www.economist.com