The escalating tariff war between the United States and China has put the Chinese economy under significant pressure, with experts predicting a surge in unemployment and potential social unrest in China. The imposition of tariffs, with the U.S. levying a 145% tariff on Chinese imports and China retaliating with a 125% tariff on U.S. goods, has led to a stalling of Chinese exports and a sharp decrease in orders for foreign trade enterprises. The ripple effects are being felt across various sectors, with the shipping industry experiencing a wave of empty flights and widespread complaints from the industry online.
Experts estimate that the trade volume between the U.S. and China could shrink by as much as 80% in the next six months, potentially causing a 3% drop in China’s GDP and pushing the unemployment rate to as high as 11%, adding pressure to an already struggling employment landscape. In fact, official statistics already indicate a rising unemployment rate in China, with the youth unemployment rate possibly reaching as high as 46.5% as early as 2023.
Amidst the already grim employment situation in China, the ongoing tariff war has exacerbated the problem, leading to the closure of many factories and the downward mobility of business owners, further expanding the pool of unemployed individuals. As the number of jobless continues to rise, social stability in China faces increasing challenges despite the government’s efforts to implement measures to mitigate the impact and shift blame towards the U.S. through nationalist rhetoric.
The specter of a potential resurgence of the “Blank Paper Movement” looms as a warning, reminiscent of the large-scale protests against the “zeroing-out” policy that swept across the country following the Urumqi fire in 2022. The movement ultimately forced authorities to reconsider their oppressive measures.
Recent statements from Chinese officials vowing to stand firm in the tariff war echo Mao Zedong’s call for a protracted struggle. This insistence on perseverance in the face of economic challenges is reminiscent of past slogans and may not be enough to quell growing discontent among the Chinese populace, particularly as the effects of the trade war worsen. Economic analyst Li Hengqing warned that the accumulation of unemployed graduates and disenfranchised workers could ultimately lead to social unrest and upheaval.
Reports from legal scholar Yuan Hongbing reveal internal documents circulated by the Chinese Ministry of Public Security warning of the emergence of numerous grassroots organizations, such as associations, veterans’ groups, and labor unions, expressing dissatisfaction with the current government’s policies. The government fears that these “gray organizations” could transform into politically destabilizing entities if economic conditions worsen due to the escalating trade war between the U.S. and China.