China grants $1.3b unemployment insurance
US unemployment crosses 16m, causes recession
Published: Apr 10, 2020 09:08 PM

Job seekers at a job fair in Changchun, Northeast China's Jilin Province on March 12 Photo: IC

China ramped up efforts to improve the livelihood of low-income households and unemployed amid economic downward pressure from the COVID-19, while total unemployment claims in the US has crossed 16 million, which an expert said would lead to a recession earlier than expected.

By the end of March, China had granted unemployment insurance benefits worth 9.3 billion yuan ($1.3 billion) to 2.3 million people who lost their jobs from the effects of the COVID-19, while offering 410 million yuan in subsidies to 67,000 unemployed migrant workers, Gui Zhen, an official at the Ministry of Human Resources and Social Security, said at a press briefing on Friday.

To guarantee the basic necessities of the unemployed, the State Council, the country's cabinet, also prolonged the period the senior unemployed could apply for unemployment insurance benefits, rolled out unemployment subsidies and doubled temporary price subsidies to them, Gui said.

These measures came amid huge pressure in stabilizing employment for China, whose urban unemployment rate in February reached a two-year high of 6.2 percent. 

China's economic growth faces much uncertainty at a time when the country steps up efforts to spur domestic consumption, analysts said.

China's unemployment rate may rise 2 to 3 percentage points from the pre-virus level, which will drag down retail by 6 to 9 percentage points, Ying Xiwen, deputy director of the Macro-economy Research Center at Academy of China Minsheng Bank, told the Global Times on Friday.

Ying predicted China's economic growth may contract 10 percent in the first quarter.

However, compared to China, the US would bear a greater brunt from soaring unemployment amid the deteriorating outbreak. The US Department of Labor announced Thursday that more than 16 million workers sought unemployment benefits in the past three weeks.

Economists from China International Capital Corp predicted in a recent note that the US unemployment rate may grow rapidly in April and May to over 10 percent, and more US economic indexes may decline to historical lows.

Such a large unemployment scale is not surprising as the US services sector - which creates nearly 80 percent of the nation's jobs - took a hard hit from the global pandemic, Chen Shida, head of the Zhejiang Academy of Work Security, told the Global Times on Friday.

"As there have been problems with its economic fundamentals, the impact of unemployment on the US economy would last until at least 2021," Chen said, noting that the US economy has entered recession.

US investment bank JPMogran Chase & Co. predicted that the US GDP would contract 10 percent in the first quarter of the year and a deeper contraction of 25 percent in the second quarter, Reuters reported.

"The biggest difference between the US and China is that the latter swiftly put the disease under control and then boosted economic and social activities to normal. As the pace has accelerated since March, national employment can be guaranteed to some extent," Chen said, noting that China's economy may improve in May.