How Is China’s Official Unemployment Rate Calculated, and How Useful Is It?

At present, the National Bureau of Statistics has two unemployment measures: the “registered unemployment rate” and the “surveyed unemployment rate.” Given China’s circumstances, the measures actually used in the statistics are the “urban registered unemployment rate” and the “urban surveyed unemployment rate.”

Let us first look at the urban registered unemployment rate. Put simply, people with rural household registration are not included, and people who have not registered as unemployed with the labor and social security authorities do not count as unemployed either.

Urban registered unemployed persons: People with non-agricultural household registration who are within the specified working-age range—from age 16 to retirement age—are capable of working, have no job but want employment, and have registered as unemployed with the local labor and social security authorities. —“Employment and Wages,” National Bureau of Statistics

Urban registered unemployment rate: The ratio of urban registered unemployed persons to the sum of employees in urban work units—excluding rural workers employed by those units, reemployed retirees, and personnel from Hong Kong, Macao, Taiwan, and abroad—employees of urban work units who are not at their posts, urban private-business owners, individual business owners, people employed in urban private enterprises or in individual businesses, and urban registered unemployed persons. —“Employment and Wages,” National Bureau of Statistics

The data for the urban registered unemployment rate come from the human resources and social security authorities. This method probably fits the circumstances of the planned-economy era relatively well and can guide the government in providing public employment services to unemployed people. However, it cannot accurately reflect macroeconomic conditions.

For this reason, the 2018 Government Work Report included the urban surveyed unemployment rate as an expected target for national economic and social development for the first time. Starting in April that year, the National Bureau of Statistics began publishing the national urban surveyed unemployment rate regularly every month.

When I looked through the China Statistical Yearbook 2023, I found that there were no data for the urban registered unemployment rate in 2022.

It is therefore quite likely that the urban surveyed unemployment rate will replace the urban registered unemployment rate as the main statistical measure of unemployment in the future.

So what is the urban surveyed unemployment rate? Put simply: surveyed unemployment rate = unemployed population / (unemployed population + employed population) × 100%.

The surveyed unemployment rate is the percentage of the unemployed population, estimated through a sample survey, in the sum of the employed and unemployed populations. It is calculated as follows: surveyed unemployment rate = unemployed population / (unemployed population + employed population) × 100%. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

How, then, does the National Bureau of Statistics define employed and unemployed people?

Put simply, if you do one hour of casual work in a week, you do not count as unemployed. If you are studying at school, you do not count as unemployed. Nor do you count as unemployed if your workplace has temporarily suspended work for no more than three months.

Unemployed persons meet all three of the following conditions: (1) they have no job; (2) they have looked for work in the three months preceding the survey date; and (3) if offered a suitable job, they could start work within two weeks. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

Employed persons include two categories: (1) people who worked for at least one hour during the survey’s reference week to obtain labor remuneration or business income; and (2) people who have a job but were not working because of leave, a temporary work stoppage, or similar reasons. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

Persons outside the labor force are those other than the employed and unemployed: people who have no job and are not looking for work, or are unable to work. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

You may feel that this definition of employment is too broad. According to the National Bureau of Statistics, however, these criteria for judging employment and unemployment follow the statistical standards recommended by the International Labour Organization, making the resulting surveyed unemployment rate internationally comparable.

How is this unemployment rate surveyed? In other words, what does the survey process involve?

The National Bureau of Statistics explains it as follows:

China’s surveyed unemployment data come from the national monthly labor force survey. The survey uses a stratified, multistage sampling method with probability proportional to the number of housing units. First, residents’ or villagers’ committees are selected randomly nationwide. Households are then selected within those committees through systematic random sampling. About 340,000 households are surveyed each month, essentially covering all prefecture-level cities and county-level areas in mainland China. Under the current sample design, at a 90% confidence level the relative error of the national urban surveyed unemployment rate is within 2%. Thus, if the estimated urban surveyed unemployment rate is 5%, there is 90% confidence that the true rate lies between 4.9% and 5.1%. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

During a specified period each month, survey workers visit selected households with electronic terminals, or tablets, to collect employment and unemployment information. They submit the data directly to the National Bureau of Statistics through an online reporting system. The bureau aggregates the submitted data using weights to estimate the national and provincial urban surveyed unemployment rates. —“What Is the Surveyed Unemployment Rate?”, National Bureau of Statistics

In other words, the National Bureau of Statistics gathers information from a sample of 340,000 households each month, allocated in a particular way among selected residents’ and villagers’ committees. Staff from those committees then contact the selected households, collect employment and unemployment information, and upload it to the system. The bureau uses the uploaded information to estimate the national and provincial urban surveyed unemployment rates.

So, if we could conduct extensive interviews with frontline staff at residents’ and villagers’ committees, selected survey households, and employees of the National Bureau of Statistics, we could work out how far the published unemployment rate differs from the actual situation.

In my view, as long as households do not give arbitrary answers, frontline staff do not fill in the forms carelessly, the National Bureau of Statistics does not manipulate the calculations, and the procedures run without errors, this statistical method is scientific and offers useful information.