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The Challenge of China's Shifting Labor Market

The new year is upon us, and McKinsey China has come out with a new set of predictions for 2014, which you can read here. A key theme running through these predictions is a significantly changing labor market, particularly as a result of advances in technology and the way it is being utilized both in the workplace and by consumers.

China is transitioning away from being the world's factory floor, with a seemingly inexhaustible supply of eager workers flowing in from the countryside. As a result of its family planning policy and aging population, China's labor pool has actually begun to shrink. Together with rising wages, the decrease in available factory workers has led manufacturers to explore robotics as an alternative to human labor. Expect the trend toward more automation to continue, and with it the demand for robotic technology.

Meanwhile the growing ranks of China's urban consumers are performing more transactions online that previously required interacting in person with sales or service personnel. Whether shopping for insurance or buying a television, there is less and less of a need to go physically to an office or retail outlet. Goods ordered online show up at the purchaser's home, often within hours, courtesy of the growing fleet of delivery vehicles plying China's streets. While this trend spells more opportunity for delivery men and women, it portends a decline in available jobs in the sales and service sectors.


The advances in technology contributing to these labor shifts should equate to new jobs, but China is facing a shortage of personnel in the tech sector, especially at the CIO level, who have the ability to innovate and to adapt new technology to China's emerging business and social challenges. The millions of graduates spilling out of China's universities are ill-equipped for this environment. Many find that China's test-based educational culture did not prepare them for employment in the real world or that jobs for which they did prepare are simply not available. The result is pockets of educated but unemployable young people, such as those who compose the "ant tribe" in Beijing's northern suburbs.

At the other end of the spectrum are the children of laborers who have come from the countryside to find work, the so-called "second generation migrants." For these who have basically grown up in the city, a high school education not to mention college is a far-off dream, yet they expect to find better jobs than their parents had.

The seemingly unlimited opportunity symbolized by China's burgeoning cities may prove an empty promise to the current generation of upwardly mobile yet frustrated urbanites. This generation poses a new challenge for China's church, which, up until now, has thrived amidst the energy and buoyant optimism that has characterized China's rapid urban development. Should the pace slow, leaving millions in the cold, the church's attention may need to shift from engaging the distracted hearts of busy working people to bringing meaning to a disillusioned and increasingly restive cadre of unemployed youth.

Image credit: Break, by Ming Xia, via Flickr

Brent Fulton

Brent Fulton

Brent Fulton is the founder of ChinaSource.  Prior to assuming his current position, he served from 1995 to 2000 as the managing director of the Institute for Chinese Studies at Wheaton College. From 1987 to 1995 he served as founding US director of China Ministries International, and from 1985 to... View Full Bio