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Main Industrial Development Issues and Challenges

Under-employement and unproductive labour

The labour market has changed drastically in the past decade, resulting in a large surplus worker population and exacerbated rural-to-urban migration. The number of surplus workers in rural areas is estimated at more than 150 million.  According to China’s National Bureau of Statistics, the unemployment rate was 4.6 percent in 2006, though studies suggest that this figure applies to urban areas only.   Moreover, rural migrant workers, ethnic minorities (most of whom reside in the central and western provinces) and women—categorized as vulnerable populations—face systemic and societal discrimination in employment opportunities and wages.

Agriculture currently employs 44 percent of China’s labour force while generating only 12 percent of its GDP. Industry, on the other hand, produces 48 percent of GDP while employing only 24 percent of the labour force. The current pressure on the government is to develop local industrial sectors in rural areas, as this has the greatest potential to absorb redundant agricultural labour and minimize discriminatory treatment.