China Center Chart Dive: Some progress visible in labor productivity growth

In 2016, China’s industrial employment shrunk by 5.9 million workers, a -6 percent YOY decrease. The drop was partly the result of the government-led campaign to reduce overcapacity, but it also suggests some progress in industrial automation. It’s not a surprise to see the workforce in coal mining and steel processing declining (each by more than 10 percent YOY in 2016), but contracting employment was also seen in some fast-expanding industries. For example, electronic device manufacturing grew 10 percent YOY in terms of real added-value in 2016, but the industry also cut 5.4 percent of its employment during the year. Rising wages and falling prices of industrial robots were the two key drivers of this shift. When employment drops amidst increasing output, it implies increasing labor productivity.