China risks huge loss of jobs in trade war

A chronic housing slowdown and high youth unemployment have made China more vulnerable than it was in President Donald Trump's first term, write Daisuke Wakabayashi from Seoul and Meaghan Tobin from Taipei

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US President Donald Trump taunted China in his first term, claiming his tariffs had led to the loss of five million jobs there. In a 2019 tweet, he said his trade policies had put China "back on its heels.

Economists sharply disputed how much pain Trump's tariffs caused, but the message underscored the centrality of jobs to China's export-reliant economy.

Four months into Trump's second term, the United States and China are again negotiating over tariffs, and the Chinese labour market, especially factory jobs, is front and centre. This time, China's economy is struggling, leaving its workers more vulnerable. A persistent property slowdown that got worse during the Covid-19 pandemic has wiped out jobs and made people feel poorer. New university graduates are pouring into the labour pool at a time when the unemployment rate among young workers is in the double digits.

"The situation is clearly much worse," said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at the investment bank Natixis. As employment opportunities in other sectors disappear, she said, the importance of preserving China's 100 million manufacturing jobs has grown.

This month, Chinese and US officials agreed to temporarily reduce the punishing tariffs they had imposed on each other while they tried to avert a return to an all-out trade war that would threaten to undermine both economies.

In a research report, Natixis said that if US tariffs stayed at their current levels of at least 30%, exports to the United States would fall by half, resulting in a loss of up to six million manufacturing jobs. If the trade war resumes again in full, the job losses could surge to nine million.