BEIJING (Reuters) -The Kenyan worker Liu Shangzon lost two jobs in just one month as the US import tariff rose to triple numbers in April, forcing the lighting products factory in Guangdong, then a shoe maker, to reduce production.
The definitions fell significantly this week, but Liu abandoned the functions of the factory, and has now returned to agriculture in his hometown in southern China.
“It was very difficult this year to find a fixed work,” said 42-year-old, who used to win between 5,000-6000 yuan ($ 693-832 dollars) per month. “I can barely tolerate food.”
The rapid escalation of the trade war between the United States of China after the Geneva talks at the end of last week helped to avoid the nightmare scenario: the losses of mass jobs that could endanger social stability-what the ruling Communist Party considers its first priority, its key in its legitimacy and the ultimate force.
However, the US tariff for this year of 145 % left permanent economic damage, and even after the Geneva talks remained high enough to continue to harm the labor market and slow Chinese growth.
“It was a victory for China,” said a policy consultant on the talks. “The factories will be able to restart the operations and there will be no mass demobilization operations, which will help maintain social stability.”
But China is still facing a 30 % tariff challenge at the top of the already existing duties.
“It is difficult to do business by 30 %,” the counselor added. “Over time, it will be a burden on China’s economic development.”
Before meeting in Switzerland, Beijing has become increasingly concerned about the internal signals that Chinese companies are fighting to avoid bankruptcy, including intensive industries in employment such as furniture and games, Reuters said last week.
Now there is some relief.
Le Za, the chief economist in Soochow Securities, estimates that the number of functions at risk decreased to less than a million from about 1.5-6.9 million before reducing the customs tariff.
Alicia Garcia Herro, the head of the Economy in Asia and the Pacific Ocean in Natixis, estimated that the tripartite customs tariff can cause job losses from 6 to 9 million. She said that the current tariff levels can lead to layoffs from 4 to 6 million, while the customs tariff decreases by another 20 % about 1.5-2.5 million jobs.
The economic growth in China was estimated at 2025 by 0.7 percentage points in the most optimistic scenario, 1.6 points under the current tariffs, or 2.5 points if the conflict returns to April.
“When the tariffs increase to this high level, many companies decide to stop employment and start returning mainly to the homeland,” said Garcia Herro.
“By 30 %, I doubt that they will say, well, they return. Because it is still high,” she added. “The Chinese government may say, Wow, this was amazing. But I think many companies are not sure that this would work.”
“unstable”
Government advisers say that China is trying to reduce job losses in manufacturing through higher government investments in public projects that absorb workers and using the central bank to direct financial resources where new jobs can be created.
The Popular Bank of China revealed last week a new tool to provide cheap funds for elderly services and care, among other stimulus measures.
“Upon employment, the most important driver will come from increasing government investment, given that enthusiasm for companies’ investment has not yet increased,” said Jia Kang, the founding president of the China Academy of the New Economy of the supply economy.
He said that Beijing will try to maintain the budget deficit rate at approximately 4 % agreed in March, but a higher number cannot be excluded “it cannot be excluded.”
The exact impact of a tariff last month in the labor market is unknown. A survey of the factory activity predicted that employment decreased in April, but analysts believe that Beijing was more concerned about a possible acceleration of job losses than absolute numbers over a month.
The exporters had already restored their working power to remain able to compete in the risks that turned into a cycle of contraction.
“It is difficult to give a number,” the second policy consultant said. “The economy is already weak and adds the war of tariffs frost above snow, but it is just a frost.”
Analysts say that one of the main obstacles to creating job opportunities is the inability to predict the identification policies of US President Donald Trump, which keeps the sources cautious.
Lee Qiang was among a group of 20 people losing their jobs in a company that was a mediator, exporting air cylinders, which are used in industrial machines and made by other Chinese companies.
His company closed after losing the US orders and conducting them in Japan, where the competitors rushed to replace the American market.
He now works as a driver in the southwestern city of Chengdu and has no plans to return to the export sector, even after alleviating US -Chinese tensions.
“Trump’s policies can change China at any time, making jobs in export industries unstable,” said Li. “I am not planning to put any effort to work in the export sector anymore.”
($ 1 = 7.2109 Chinese Yuan Renminbe)
(I participated in the Liangping Gao, Kevin Yao and Beijing News Room reports; additional reports by Ellen Zhang in Beijing; written by Marius Zaharia; edited by Lincoln Vist.)
