China announces massive jobless increase

February 2, 2009

, BEIJING, Feb 2 – China on Monday announced a massive increase in unemployment while South Korea said exports plunged, in another wave of bad news for Asian economies hit hard by the global financial crisis.

Premier Wen Jiabao said Beijing could resort to "extraordinary measures" to boost its economy, in an interview given just before the latest figures showed the global slowdown was hitting China harder than earlier numbers indicated.

Wen\’s remarks came with the US Senate preparing to begin debate later Monday on President Barack Obama\’s 819 billion dollar stimulus package, aimed at reviving the world\’s biggest economy in the face of the global downturn.

China said around 20 million rural migrants were now out of work — more than triple the number announced last month — in an indication that the slowdown in the world\’s third-largest economy was intensifying.

Large numbers of Chinese workers have lost their jobs as demand in North America and Europe for the cheap consumer goods made in China has fallen off sharply, forcing thousands of factories to shut their doors.

An average of six to seven million people leave their rural homes every year to find jobs, on top of the 20 million jobless, senior rural planning official Chen Xiwen said.

"According to these calculations, there will be fairly big pressure on employment for around 25 million rural residents," Chen said.

The government said Sunday that 2009 could be the "toughest year" since the turn of the century for development of the countryside, which has fallen behind as Chinese economic reforms have favoured the cities.

In an interview with the Financial Times, premier Wen said "new, timely and decisive measures" could be needed to spur the overall economy in China, less than three months after unveiling a 580 billion dollar stimulus plan.

"We must take forceful steps. Under special circumstances, necessary and extraordinary measures are required," he told the paper.

Wen, who took aim at the US economic policy in Davos last week, also said it was "ridiculous" to suggest, as some economists have done, that its vast pool of domestic savings was to blame for the current global crisis.

"Running our own affairs well is our biggest contribution to mankind," said Wen, underlining the goal to maintain growth at around 8 percent — the minimum level Chinese authorities believe is needed to avoid social unrest.

Taiwan, a major electronics exporter also hit hard by the slowdown, meanwhile announced a 21 billion dollar stimulus drive over the next four years, hoping to create 150,000 jobs and bring unemployment under 4.5 percent.

The jobless rate on the island was 5.03 percent in December, the highest level in more than five years.

South Korea said exports in January were worth 21.7 billion dollars, a year-on-year drop of 32.8 percent and the biggest such decline since 1980.

Exports to China, the country\’s largest trading partner, plunged 32 percent, while those sent to the European Union fell 47 percent.

There was also more gloom in Japan, where new vehicle sales fell to their lowest level in four decades, according to the latest industry figures.

"Consumer sentiment has worsened drastically," said a spokesman for the Japan Automobile Dealers Association.

In the United States, President Obama said passage of his stimulus package was essential.

"We\’ve got to start putting people back to work," the Democratic president said.

On Friday, data showed the US economy shrank nearly four percent in the last quarter of 2008, the sharpest decline since 1982, while Japan said factory output was falling at a record pace, unemployment was soaring and consumer spending was sharply down.

The major Asian stock markets were down on Monday. Tokyo closed down 1.50 percent, Sydney shed 1.2 percent and Hong Kong was off 4.1 percent in afternoon trade.

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