Amid China’s economic downturn and rising unemployment rates, a semi-official survey reveals that 77% of current ride-hailing drivers in China have transitioned into the industry after losing their previous jobs, with 62.8% of them being the sole breadwinners in their families. Experts point to these statistics as evidence of the collective decline of the middle-income group.
A recent study by the China New Employment Patterns Research Center, covering over 5400 ride-hailing drivers in 13 provinces and regions, found that a significant 77% of ride-hailing drivers in China shifted to this sector after losing previous jobs, with 90% having worked in manufacturing, construction, or self-employment fields.
According to the “China Finance and Economics Weekly,” the report mentions the case of Li Jiarong, a 40-year-old ride-hailing driver in Guangdong, who was once a factory owner with over a hundred employees. However, his factory was forced to close during the COVID-19 pandemic, leading him to venture into the ride-hailing industry.
Overseas experts believe this report provides data support for the collective decline of China’s middle-income group.
Chinese issues expert Wang He told Dajiyuan that in Western countries, the middle class plays a crucial role in a nation’s economic development and political stability. In mainland China, there is no true middle class, but the fall of the middle-income group has significant and far-reaching effects.
He explained that following years of devastation during the pandemic, the unemployment rate among the middle-income group is very high, with many business owners losing their jobs. The poor performance of the Chinese economy in recent years is partly due to this group’s collective decline, resulting in a significant reduction in consumption. The wealth illusion from property investments in the past has now vanished, and losses from stock market investments are substantial.
Wang He stated that the whereabouts of these middle-income individuals and how they sustain their livelihoods have been occasionally reported, such as transitioning to ride-hailing, but with a lack of concrete data support. This survey report is the first to provide essential data, making it significant.
According to the China New Employment Patterns Research Center’s report, the average age of surveyed ride-hailing drivers is 39.8 years old, with 62.8% of them being the sole employed individuals in their families.
Official Chinese Communist Party data shows the urban unemployment rate in August this year was 5.3%, with a 3.9% unemployment rate among the age group of 30-59, representing the middle-aged population. It is widely believed that the CCP’s statistics are falsified.
Wang He stated that many of the CCP’s official data, including GDP and unemployment rates, are fabricated to suit political needs. For instance, the current urban unemployment rate does not include migrant workers.
Last November, Gao Shanwen, Chief Economist at Guotou Securities, mentioned during a speech that China’s economic situation was characterized by “lively elderly, lifeless youth, and hopeless middle-aged individuals.” He also suggested that China’s economic growth rate over the past three years may have been overestimated by 10 percentage points but was subsequently silenced.
Also, in November of last year, Fu Peng, Chief Economist at Northeast Securities, mentioned in an internal speech that “the sudden emergence of 20 million ride-hailing drivers this year, many of whom were originally middle class,” has directly led to the contraction of the middle class, causing a continuous decline in total demand. Fu Peng’s short video platform account was later blocked, and he left Northeast Securities in April of this year.
The aforementioned report highlights that ride-hailing platforms serve as employment channels with low entry barriers and high flexibility for displaced traditional workers. Zhang Chengang, Associate Professor at the Capital University of Economics and Business in Beijing, stated that the ride-hailing industry offers “sufficient cushioning space” for macroeconomic fluctuations.
Wang He expressed that the report’s conclusions and comments from mainland experts are still in line with official efforts to maintain stability. Labeling ride-hailing or food delivery as “employment support” is a form of embellishment. In reality, the ride-hailing industry in China is severely oversaturated, and individuals are only turning to this as a last resort, making earnings exceedingly challenging due to limited market capacity.
A ride-hailing driver named Jin Ming (pseudonym) from Shenzhen, Guangdong, told reporters, “In first-tier cities, over half of the ride-hailing drivers used to be bosses, driving while seeking opportunities. Running a ride-hailing service can’t even cover my debts; it only marginally eases family expenses and provides basic household support. To earn money in a first-tier city, you have to drive during at least two peak periods each day, as the fares during peak hours are higher.”
Another driver, Rong Shan (pseudonym), who turned to ride-hailing after becoming unemployed in Guangzhou, stated to Dajiyuan, “I tried driving for a week but couldn’t make any money. There are many pitfalls, and I ended up losing several thousand yuan. Now, only those without debts drive for ride-hailing. It’s a dead-end for those who turn to it. Running a ride-hailing service means throwing your money and time into a pit.”
Rong Shan compiled a list of the “top ten pitfalls” of driving for ride-hailing:
1. Loss of high deposit: This is the most direct pitfall. Contracts usually stipulate that if you drive for less than a certain number of days or hours per month, you will not get your deposit back, resulting in significant losses.
2. Breach penalties: Typically around 20% of the remaining rent (e.g., if your lease is for 12 months at 3000 yuan per month and you only rent for one month, your penalty is 3000 x 11 x 20% = 6600).
3. Unsettled rental fees: Even if you drive for only a few days, you still have to pay daily rent, and your earnings may not cover these costs.
4. Electricity cost: Driving 300-400 kilometers per day can cost 30-50 yuan in electricity for electric cars. If your earnings are low, this expense becomes a pure cost, essentially paying to work.
5. Scratches on the vehicle: basic paint repairs can cost 300 to 500 yuan.
6. Some platforms lock your earnings: If you quit halfway, you may not be able to withdraw earnings from your account, essentially driving for free.
7. Violations and cleaning fees for the vehicle: If violations are found when returning the vehicle, you are responsible for fines and points deducted or pay a “processing fee” which is usually doubled; if there are stains or odors in the car, a cleaning fee of 100-500 yuan is deducted.
8. Time and opportunity costs: Driving for 10-14 hours per day deprives you of opportunities for other side jobs, rest, or self-improvement, wasting the most valuable resource of time.
9. Physical wear and tear costs: Prolonged sitting leads to lumbar/cervical pain, bladder damage from holding urine, irregular eating habits affecting digestive health, these hidden health costs may require additional money and time for recovery.
10. Sink costs of pre-driving preparations: Health certificates (dozens of yuan), ride-hailing driver’s licenses (hundreds of yuan), in-car enhancements (seat covers, phone mounts, etc.), all expenses and efforts are wasted if you quit mid-way.
Recently, a female blogger from Yulin, Guangxi, stated that small and micro-enterprises in Yulin are collapsing one after another. Nowadays, many luxury car drivers encountered while ride-hailing used to be business owners.
One blogger mentioned that the previous “DiDi group” has now turned to working for DiDi. It’s convenient to hail a ride now, even in the middle of the night; “The reality is harsh. When women can’t find jobs, they can go home to take care of the children, while men without jobs have to resort to delivering food or driving for DiDi to support their families. Ride-hailing has become the last piece of dignity for middle-aged people, jokingly referred to by netizens as the triathlon of takeout, DiDi, and express delivery, unexpectedly becoming the highest income option in our middle age.”
A ride-hailing driver jokingly commented that the ride-hailing industry has become a refuge for unemployed car owners. “To be honest, even driving for ride-hailing has a lower barrier entry than delivering food. If you work as a food delivery rider, you might need to buy or rent an electric vehicle, not to mention the cost of clothes. If you work as a courier and don’t have a van, how will you transport goods? In this industry, ride-hailing has become a shelter, that’s the truth.”
A blogger from Suzhou stated, “Do you know how many people became unemployed this year? Where did all those unemployed people end up? Have you noticed that there are ride-hailing drivers and food delivery workers everywhere now, and the market is saturated. Orders are scarce, even on a daily basis.”
The blogger explained that in recent years, the overall environment has been unfavorable, and companies have no projects, leading to numerous bankruptcies and closures. Some bosses want to transition into temporary roles like designated drivers or food delivery drivers. Many companies in seemingly prestigious office buildings, especially those related to real estate, have declared bankruptcy liquidation.