How important are exports for job growth in China? A demand side analysis

- We extend global input-output methods to analyze impact of foreign demand on Chinese employment.
- During 1995-2001 increases in productivity offset growth in foreign demand so net effect on employment was nil.
- Between 2001-2006 foreign demand added 70 million jobs, mainly for workers with only primary education.
- Since 2006 growth in domestic demand for non-tradables has become most important source for job growth.

We analyze the impact of foreign demand on Chinese employment creation by extending the global input-output methodology introduced by Johnson and Noguera (2012). We find that between 1995 and 2001, fast growth in foreign demand was offset by strong increases in labor productivity and the net effect on employment was nil. Between 2001 and 2006, booming foreign demand added about 70 million jobs. These jobs were overridingly for workers with only primary education. Since 2006 growth in domestic demand for non-tradables has become more important for job creation than foreign demand, signaling a rebalancing of the Chinese economy.