Fang Lian Talks: Could China face massive nationwide unemployment? You may not be qualified to be unemployed! China's new unemployment form - flexible employment! Unemployment rate | youth unemployment | unemployment wave
This article examines the discrepancy between unemployment rate data and the actual situation against the backdrop of China’s economic downturn, analyzing the new forms of employment in China represented by flexible labor and flexible employment. The article points out that China is facing labor downgrading and job‑structure downgrading, with many long‑term workers turning into hourly workers, manufacturing and service sectors facing compressed labor costs, and it explores the possible future scenario of a nationwide highly flexible employment state and the social security dilemmas behind it.
Video link:
Full text:
After the economic data for May were released, several indicators hit new lows. The total retail sales of consumer goods, which measures consumption, posted its first negative value since the pandemic. In addition, foreign direct investment, consumer confidence index, and local fiscal revenue also kept setting new lows. Yet, at the same time, we can see that, according to the National Bureau of Statistics, China’s unemployment rate not only did not rise, but actually showed a modest improvement, dropping by 0.1 percentage point. The unemployment rate fell from 5.2% in May to 5.1%.
So is this unemployment rate fabricated, or is it really that low? Could China’s future economic recession evolve into nationwide massive unemployment? Hello, I’m Duoduo Fang Lian, and today we’ll discuss this issue. Before we talk about whether large‑scale unemployment might occur in the future, we first need to address another question: what does the current 5.1% unemployment rate actually mean?
Regarding China’s economic fundamentals, I believe that regardless of whether your political stance is Little Pink, rebel, or centrist, there is at least a consensus that China’s economic fundamentals are indeed weak, and have been weak for a long time. So why has this weak economic base and downturn not translated into a concrete high unemployment rate? This brings us to a term you have probably heard many times recently: flexible employment.
According to Fudan University’s “White Paper on the Development and Innovation Practice of Flexible Employment in the Service Industry,” the number of flexible employees in China began to surge from 2024, with an annual growth rate as high as 40 million people. It is projected that by 2026, the number of flexible employees will reach 320 million. This is a terrifying figure. China currently has a population of 1.4 billion, but 1.4 billion people does not equal 1.4 billion workers. Among those 1.4 billion people are children, the elderly, and those studying for exams or civil service.
According to the statistics bureau, the theoretical employed population in China is currently 725 million, and in the past this labor force was mostly long‑term formal employees. Now the situation has changed: 320 million flexible employees represent about 44 % of China’s labor force—nearly half of workers are in flexible employment positions. Of course, many people’s first reaction to these 320 million flexible workers is to think that flexible employment is a scam. Flexible employment equals no job. Indeed, according to China’s statistical standard that counts one hour of work as employment, flexible employment may very well be a state of having no real job.
China's number of newly added flexible jobs in the past two years is also around 80 million. If we counted all these 80 million flexible jobs as unemployment, China's actual unemployment rate would be about 16%. This may match many people's psychological expectation of China's current unemployment rate. However, the reality of flexible employment is more complex than imagined, and it is unreasonable to simply treat all flexible employment as unemployment. Flexible employment looks less like unemployment and more like a downgrade in employment. This is what I consider a new form of unemployment in China's future. People are not unable to find jobs; rather, there is a massive downgrade in employment.
You might wonder where the 40 million new flexible workers each year in China come from. It cannot be that the total labor force is increasing. In 2025, compared with 2024, the total labor‑force population actually decreased by 10 million. The first source of the 40 million flexible workers is the group traditionally understood as unemployed. A previous Caixin survey showed that 77% of Chinese ride‑hailing drivers entered the job after being unemployed. These unemployed individuals find it hard to secure positions similar to their previous ones, so they can only take flexible jobs, forming the primary cohort of China's flexible workforce. The second major cohort consists of recent university graduates.
According to data from China's Ministry of Education, in 2025 the number of fresh graduates will be about 12.22 million. Of course, not every graduate seeks a job; about 4 million either take civil‑service or graduate‑school exams and do not enter the labor market, and about 20% are unemployed. Among the remaining graduates who enter the labor market and find jobs, 4.27 million move into flexible employment, meaning that at least half of the fresh graduates end up in flexible work.
University graduates engaging in flexible employment has long been a common phenomenon in China. Contrary to the traditional impression that flexible workers are older and less educated, Caixin’s earlier survey shows that most flexible workers in China are under 35, and their education levels are much higher than assumed. For example, live‑streaming is no longer dominated by high‑school dropouts or street‑wise hustlers; the industry now has a college‑graduate rate exceeding 50%.
Even more extreme, seemingly low‑skill delivery jobs—riders and food‑delivery couriers—now have a college‑graduate rate close to 40%, and if associate‑degree holders are included, the proportion of workers with higher education reaches 80%. Besides the unemployed and fresh graduates, there is another group often overlooked but actually the largest among the new 40 million flexible workers: long‑term employees who have shifted to flexible employment. This is the main source of the recent increase.
In our previous understanding, which industries would heavily hire flexible workers? Typically construction, manual labor such as movers, etc. We imagined flexible‑work recruitment would be concentrated in talent markets. However, this situation is changing rapidly; even traditionally long‑term positions are turning into hourly, purely flexible jobs, such as hotel waitstaff, coffee‑shop baristas, restaurant dishwashers, and front‑desk cashiers.
When I searched for flexible‑work issues, I found several domestic flexible‑work platforms. Unlike earlier platforms like ZBJ that offered design or art gigs, these platforms mainly provide basic labor‑flexible positions. For instance, one platform claims to provide flexible‑work assistance to multiple companies, including Hilton, KFC, McDonald’s, and Tianhao Coffee, reducing labor costs by 40%.
My research confirmed this. On the platform, many medium‑ and large‑size enterprises post jobs for basic hourly roles such as dishwashing, front‑desk, and serving. Notably, Tianhao Coffee, according to interviews, has, over three years, converted 50% of its original staff from long‑term employees to flexible workers to cut labor costs. Sometimes it feels like “an orange grown in the south remains an orange, but an orange grown in the north becomes a bitter orange.”
Tianhao Coffee’s English name is Tim Hortons, a Canadian national brand comparable to Canada’s McDonald’s. In Canada, Tim Hortons offers decent labor protections, including an eight‑hour workday and dental insurance. After Chinese investment, however, it has become a model of flexible employment—truly an abstract transformation. When such companies heavily adopt flexible employment, it should not be blamed solely on corporate greed; fundamentally, it reflects a form of layoff amid deflationary recession.
This also occurred in Japan in the past. After Japan’s bubble burst in the last century, it entered a period of employment ice age starting in 1993, and the youth unemployment rate in Japan actually increased only modestly. Japan’s employment decline was more reflected in job downgrading. Starting in 1993, a large number of lower‑cost temporary agency workers began to appear, and temporary agency work replaced the traditional Japanese contract workers, becoming the mainstream of Japanese employment for a time.
Of course, China’s problem is that the temporary agency system was already widespread in China before the Chinese bubble burst. This temporary agency system has long been known for providing no benefits or protections to workers. Chinese companies that already use temporary agencies, if they want to further compress labor rights, it is clearly unrealistic to further expand or innovate on the temporary agency system. Therefore, a more extreme form of flexible employment began to appear. Japan downgraded from a formal employee system to a temporary agency system, while China downgraded from a temporary agency system to a flexible employment system. Flexible employment further reduces corporate risk and cost.
Enterprises that use flexible employment on a large scale not only do not have to consider social security, medical insurance, or similar protection expenses, but also do not need to consider employee vacation time, further compressing wages. At the same time, flexible employees can be hired or let go at will, and businesses no longer have to bear the risk of profit decline. If a store’s performance is poor, they don’t even have to wait until next month; they can simply reduce two flexible workers tomorrow. The risk of declining performance shifts to the employees.
When risk is borne by employees, it is naturally painful for the vast labor force. Previously we worried about being fired next month; now we may worry about being fired tomorrow. In fact, even for the same roles—waiter, barista, cashier—long‑term employment relationships are certainly better than flexible employment. Although the position itself does not change, the labor relationship changes, effectively a downgrade.
No matter how the CCP tries to glorify flexible employment, claiming it is loved by young people for its freedom, I believe that for most people, if a stable job is available, no one wants a precarious flexible position. Of course, China’s employment downgrade is not only reflected in the employment relationship but also in job classification. Recently, China has been loudly proclaiming industrial upgrades and new intelligent productivity (Deep Seek) laws, boasting that world‑leading technological innovation is either the United States or China. In reality, Chinese workers’ jobs are becoming increasingly low‑end.
According to the 2025 China Blue‑Collar Employment Research Report, the number of blue‑collar workers in China increased by two million in 2025, from 425 million to 427 million. Although the increase is modest, the total labor force in China in 2025 fell by nearly ten million. The white‑collar workforce declined by about 13 million, with many white‑collar positions disappearing and turning into blue‑collar jobs; clerks became domestic helpers, programmers became ride‑hailing drivers. This is not a joke but real data.
The reasons include not only the economic downturn leading to reduced consumer purchasing power and industrial downgrading, but also the overestimation of China’s high‑tech industry. China’s current high‑tech sectors mainly include electric vehicles, new‑energy batteries, photovoltaic panels, integrated circuits, biomedicine, and electrification equipment—six sectors I call the “new six”. These are the core of China’s high‑tech industry and the core of Xi’s new intelligent productivity. In the past two years, under CCP propaganda, they appear very hot, but together they account for only about 8% of China’s GDP.
Three years ago, they had risen by only 0.5 percentage points. Moreover, what is even more infuriating is that I recently compared the financial reports of twenty new‑intelligent‑productivity companies with those of traditional industry firms and found that because high‑tech industries are highly automated, the number of jobs created per unit of GDP is only about 9% of that of normal firms.
In other words, creating ten million units of GDP might require a hundred jobs in a normal firm, but only nine jobs in a new‑intelligent‑productivity firm. This means that, although new‑intelligent‑productivity firms boast loudly, our estimates show they provide roughly five hundred thousand jobs in China—about one‑third of the number of livestreaming hosts and one‑eighth of ride‑hailing drivers. Even if new‑intelligent‑productivity doubles in three years, the number of jobs it provides will still be negligible.
Therefore, China is currently in a double‑downgrade state: labor relations are downgrading, and job positions are downgrading, creating a vicious cycle. What drives the spread of flexible employment? It is essentially consumer downgrading, which leads to employment downgrading. Most flexible‑employment positions now concentrate in the consumer sector—hotels, coffee shops, milk‑tea shops—direct results of consumer downgrading. As flexible employment spreads, many Chinese people’s expectations for the future worsen.
In the past, China's fragmented medical insurance and pension systems already made it difficult for Chinese people not to save money. Now, we have entered an era of flexible employment, and people's jobs are no longer even fixed. Some have work today, others may not have work tomorrow, and nobody knows. As a result, expectations for the future become worse and the sense of security further erodes. At this point, consumer desire drops, which further suppresses Chinese consumption and leads to a further decline in employment.
China's employment dilemma can now be said to have no visible solution or future, and not only does China's employment outlook lack hope, it also carries the risk of getting worse. China's three‑horse‑carriage model—investment, consumption, and exports—is not completely collapsed; the parts that have faltered most are consumption and investment. One of the three carriages is still running: exports. In 2024, China's exports priced in RMB grew 7.1% year‑on‑year, and in 2025 they grew 6.1% year‑on‑year.
In the whole of 2025, China's trade surplus reached $1.2 trillion, a new high in human history. Export‑driven GDP has become the last pillar of China's economy and has, to some extent, rescued some jobs. However, this export boom appears risky. China's export surge has been achieved mainly through low prices. Measured in RMB, from January 2023 to November 2025, the value of exported goods rose 14.3%, but the average export price fell about 10% cumulatively. Chinese export firms have been trading low prices for growth, which can also be described as trading low profit margins for growth.
Has that profit margin been squeezed to the limit? It is now approaching the limit. Losses among Chinese industrial firms are close to 50%, meaning roughly half are operating at a loss. As these firms' profits continue to decline, it is highly likely that industrial firms will start to emulate consumer‑goods companies such as restaurants, adopting flexible employment on a large scale. Manufacturing currently provides 80 million jobs, the most of any sector, yet only about 30% of manufacturing firms use flexible labor.
If manufacturing also shifts massively toward flexible employment, the scale of flexible work in China will reach a peak. China could have 400 million or even 500 million people engaged in flexible employment. At that point, a question arises: can society absorb so many flexible workers? Everyone is delivering food, driving ride‑hailing, who will drive the rides? Who will eat the deliveries? This touches the most crucial future employment issue in China—whether there is a limit to employment downgrading, and whether it could turn into mass unemployment for the whole population. I think the probability of total mass unemployment is not high. As the Chinese economy continues to decline, Chinese people will likely fall into a highly flexible, quasi‑unemployed state.
A typical example is the large category of domestic service within flexible employment. Amid the broader economic downturn, the domestic‑service market has surged in the past two years, growing close to 10% annually. This surge is actually driven by a drop in service prices. According to media reports, over the past three years, the average price of live‑in maids in cities such as Beijing, Shanghai, and Chengdu fell by 10% to 20%, and with the entry of internet‑based domestic‑service platforms, overall prices fell another 13% compared with last year.
Consequently, many middle‑class families who previously could not afford or were unwilling to use domestic services have started to do so. Middle‑income households earning 5,000–10,000 yuan per month now make up 71% of domestic‑service users. Solving insufficient consumption by offering cheaper services is a major trend for China's future. How will China address insufficient consumption? By making everything cheaper—food delivery, services, exports, even themselves. Unemployment, in fact, becomes a luxury. If one can only survive on low‑price, precarious flexible jobs, many Westerners would already be retired.
I refuse low‑price, precarious work, but can Chinese people retire? Can they stop working? China will not face mass unemployment, not because its economic fundamentals are strong, but because unemployment itself is a luxury, especially for Chinese people whose social‑security system is too weak to support reckless joblessness. Americans can afford unemployment because they have a basic safety net. Although the United States has one of the weakest basic safety nets among developed nations, during the pandemic it provided extra subsidies, allowing Americans to receive about $4,000 per month in unemployment benefits; after the pandemic subsidies ended, the average unemployment insurance payment remains about $2,000 per month.
This is the premise that people can become unemployed, but for most Chinese, we have no unemployment insurance, so we are essentially in a state of no income and no means to survive. China does not lack unemployment; rather, once you lose your job, it is as if you will starve to death tomorrow. People cannot afford to be unemployed, so in the future a terrifying scenario may arise: many of us now look down on flexible employment, but when researching these flexible employment platforms, I found that they are already implementing a shift‑snatching model.
If consumption continues to decline, exports begin to collapse, and the number of flexible workers keeps increasing, reaching four to five hundred million, accounting for seventy percent of China’s labor force, then we might wake up one day and the first thing we do is not go to work because there are no jobs left, but open our phones to see a list of flexible gigs paying only ten yuan per hour, start snatching those gigs, work if we get one and have food, and go hungry if we don’t. Previously we despised the 996 schedule; later we might hope that in a single day we can snatch two flexible jobs within an app, and we might even feel happy about it.
Is this precarious, ever‑shrinking wage situation unemployment? It can only be called that. It may not be unemployment, but it will be even more painful than unemployment. I believe this massive downgrade of employment and universal flexible work will be the future for Chinese people.