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It is vast, and ready to absorb displaced workers

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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.

The possibility of at least some easing of the tariffs came with the news that America’s treasury secretary, Scott Bessent, will meet He Lifeng, a Chinese vice-premier, in Geneva on May 10th. But Communist Party leaders have already been yanking levers to soften the blow, should the trade war continue. At a Politburo meeting on April 25th, they vowed to increase rebates of unemployment-insurance payments for firms hit by tariffs. And they are also looking to another labour-market saviour: China’s vast gig economy. Indeed, Donald Trump’s trade war could complete that sector’s metamorphosis from a freewheeling industry viewed with suspicion by the party, into the world’s largest state-approved e-market for labour, with a stronger safety net attached.

The party is turning to the gig economy because it is vast: the state’s 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 ($1,400) 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 15% annually until 2027. Similarly, the number of ride-hailing licences exploded from 2.9m in 2020 to 7.5m in 2024.

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 recently entered the food-delivery business, said it would take on 100,000 new riders by July. The combination of price cuts for consumers and more labour costs has spooked investors who have sent share prices tumbling. But more jobs, and some kind of safety net, is exactly what the party wants.

All of this is leading to the political rehabilitation of the companies that power it. In a broader crackdown that began 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 the platform companies 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 play more of a role in providing welfare. In February JD.com offered social-security benefits to its drivers. Meituan says that it will “gradually provide” social security for its couriers, too, starting with a pilot scheme this quarter. 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 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 firms grows too great, it may be hard 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 platform firms could disappear with the drivers’ jobs, just as the trade war has hit manufacturing jobs. Technology could influence job creation, too. Meituan is pioneering the use of delivery by autonomous vehicles and drones, which it says have completed 4.9m and 1.5m customer orders respectively.

Nonetheless, changes in the gig economy show 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 delivering meals on scooters. 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 to work in a factory that sells goods on Amazon. He thinks the trade war will end soon. 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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China’s fine diners switch from American to Aussie beef

But replacing more complex imports is proving tricky

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Источник: www.economist.com