Chinese migrant workers take a rest at a gas station after riding a motorcycle on January 25, 2019 in Zhaoqing, Guangdong province, China.
Wang He | Getty Images News | Getty Images
BEIJING – After years of trying to make it in the cities, China’s migrant workers are returning home.
An aging population, high cost of living, and new areas of business such as live streaming e-commerce are all helping to reverse the metropolitan rush that has shaped China’s economic expansion in recent decades.
Millions of Chinese people did not return to urban areas to work after the coronavirus pandemic last year, official data shows. According to the statistics office, there were still 2.46 million fewer migrant workers at the end of March than in the same period in 2019.
“Rural-to-city migration slowed even before Covid and had its first decline in 2020,” said Dan Wang, chief economist in Shanghai at Hang Seng China.
“The reverse migration will gain momentum in the coming years, partly because [the workers] cannot afford housing in the city and have no access to city health care, ”said Wang. An important factor she pointed out is aging – the proportion of migrant workers over 50 has more than doubled in the past 12 years to 26%.
Data already shows that more migrant workers are staying in the same province close to their home country instead of traveling to China’s largest cities like Beijing or Shanghai.
Government policy has also contributed to this trend.
As the state loosened its hold on the economy in recent decades, tens of millions of Chinese went to jobs in major cities like Beijing and Shenzhen. Local governments built subways and other urban infrastructure to support growth.
However, many migrants have faced tough working conditions as workers in factories or, more recently, as couriers for China’s e-commerce giants. A strict system of residence – called “hukou” – prevented migrants from accessing public health care and schools or buying property in their city of work. The flood put a strain on local resources and prompted authorities to evict migrants.
Smaller cities like Xi’an have tried to attract a highly skilled or well-educated workforce by offering benefits such as residency status.
Stay at home and stream live
China has tried other types of urbanization – building infrastructure in rural areas. These efforts contributed to Beijing’s goal of alleviating extreme poverty, a promise the government said it had fulfilled last year.
Official figures showed that 1.6 million more people returned to the countryside last year than in 2019 to start business with the help of subsidies. Just over half of the entrepreneurial projects focused on the use of live streaming and other online methods of selling products, according to an official report.
Many people outside of the big cities take jobs in this so-called digital economy as they can work remotely for companies that may still be based in city centers.
Read more about China from CNBC Pro
Qingtuanshe, a job search platform within the Alipay mobile app, said that livestream host and related job releases increased significantly over the past year. The company added that the proportion of workers for these jobs has increased from Tier 3 and Tier 4 cities.
And among the many small businesses that have popped up in the industry, Beijing-based PR firm Vyoung claims it receives calls from 20 to 30 people – increasingly from smaller cities – every day to discuss influencer partnerships with big fashion brands .
According to reports from pro-government agencies, the digital economy now accounts for well over a third of total GDP, compared to more than 50 million people in rural areas using the internet last year.
Even if it is no longer easy for newcomers to the live streaming industry to become stars, the market needs more influencers in the “middle” segment, said Jialu Shan, economist and researcher for Asian and emerging markets at the International Institute for Management Development.
The explosive growth in live streaming over the past year has been accompanied by many complaints about counterfeit products and a high response rate, Shan said. She believes the industry can now mature to a healthier state while there is still untapped opportunities in niche areas like services.
Bigger economic challenges
However, it is still unclear how much the digital economy can contribute to growth. Retail sales have grown more slowly than expected and the proportion of online sales is stagnating – a concern for an economy that tries to rely more on individual consumption.
In the first quarter, consumer optimism surged across all income levels, but spending remained subdued, according to a survey by the Ant Group and the Center for Household Finance at Southwestern University of Finance and Economics.
In high-end tech industries like semiconductor industry, Chinese leaders have warned of a talent shortage, and China’s premier Tsinghua University even established a chip-focused college in April.
The labor shortage means that for now there is a steady group of high-tech talent who “just want to jump around in several specific companies,” said Yin Zheng, director of product marketing at Moka, a recruiting-focused human resources company. The company said its corporate clients are mostly larger corporations and large tech companies.
For the majority of workers with less education, moving to smaller cities or back to the countryside can lower the cost of living. But salaries are lower, adding to China’s growing income inequality.
Analysts at the Chinese investment bank CICC said in a report this month that both the unemployment rate and job search have risen in the lower labor market since the pandemic, reflecting a divide between employers and workers.
Official data showed that the unemployment rate – based on a survey of all city dwellers – fell to 5% in May, but cities had created 230,000 fewer jobs during the year than in the same period in 2020.
The Bureau of Statistics did not provide updated figures on migrant workers at its last press conference this month.