With the eruption of the global financial and economic crisis, China being part of the global capitalist system is also directly affected. Unemployment becomes a critical issue with the drop in factory orders. On 2 February 2009, Chen Xiwen, director of the CCP Rural Work Department, said that in 2008, among the 1,300 million peasants who have migrated to the cities for jobs, 15.3%, that is, around 20 million workers, have lost their jobs and returned to their villages. According to a report by the New China News Agency, in November 2008 alone, in Henan Province, returning migrant workers amounted to 60,000 per day, much higher than past records. There were 21 million migrant peasant workers in Henan Province, of which 11 million work outside the Henan Province. Faced with this grave situation, the State Council in December 2008 called on the local authorities to prioritize their support for returning migrant workers.

Take Guangzhou as example. According to the Guangzhou Labour Department which conducted a survey of 397 enterprises employing over 260,000 workers in February 2009, in the first quarter, enterprises that recruit workers comprised only 58.7% of enterprises, compared to 70% a year ago. The number of workers to be recruited comprising the total number of workers also fell from 11% in the previous year to 7.12% this year. According to actual surveys on 16 occupations, the average monthly wages for unskilled labour was 1,050 yuan, compared to 1,160 yuan previously. Up to February, 20.3% of job applicants in Guangzhou were new job seekers. This year’s graduates in Guangzhou are 330,000. Together with the unemployed graduates from last year, the official magazine Lookout estimate was over 7 million.(Reuters, Beijing, 10 Jan 2009)

According to Zhou Tianyong, deputy director of the CCP party School Research Centre, the real urban unemployment rate in 2009 will rise to about 14%. The figure given by the Chinese Social Sciences Academy is 9.4%. The problem would be hitting very hard on the most poverty-stricken regions, where unemployed migrant workers comprise almost 30% of the migrant workers. If the families were to rely solely on agriculture for their income, their average annual income could drop over ten times. In 2008, the per capita annual income of rural households was 4700 yuan, an increase by 8% over the previous year. Much of this increase came from migrant workers’ jobs. Still this income is only one-third of an urban resident. It is also foreseen that with the mass return of peasants to their villages, land disputes will increase, and the demand for medical services will also increase. These are factors contributing to further social instability in China.                                                                                                                                                 15 May 2009