China May See ‘Severe’ Employment Losses Next Year, CICC Says

June 16 (Bloomberg) -- China may see “severe” employment losses next year as millions of temporary jobs end with the completion of projects under the government’s 4 trillion yuan ($585 billion) stimulus package, according to China International Capital Corp.

Recent pay increases in manufacturing industries and widespread minimum-wage rises may also prompt more cautious hiring practices by employers, Ha Jiming and Xing Ziqiang wrote in a report to clients yesterday.

Research from the National Development and Reform Commission estimates that the stimulus brought 5.6 million new long-term jobs and nearly 50 million temporary positions during the construction of the projects, economists at the Beijing-based investment bank said.

The supply of labor into the market next year could increase by 39 million, made up of 7.58 million college graduates, 6 million to 7 million surplus laborers moving from rural areas, and 25 million temporary workers who will lose their stimulus-related jobs, according to the CICC report.

Assuming China’s economic growth slows to 7.5 percent in 2011, there may only be about 8 million new jobs created, leading to a 31 million increase in the number of unemployed, the economists wrote.

To contact Bloomberg news staff for this story: Nerys Avery in Beijing at navery2@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net