China's government has promised that industrial cutbacks will not produce major job losses, but the country's official statistics may make it hard to tell.
Last month, the cabinet-level State Council mounted its latest drive to reduce China's huge surpluses of production capacity in industries like steel, coal, and cement, which have been blamed for plunging prices at home and abroad.
New targets for capacity cutting have been followed by tough regulatory guidelines, calling on banks to withhold credit from debt-laden enterprises and "zombie" companies that have been dodging bankruptcy for years.
The government has pledged that "outdated plants will be closed" and zombie companies will be "eradicated," state media said.
So far, the State Council has set numerical targets only for steel and coal, but downsizing is also planned for producers in the building materials sector, including cement and flat glass, the Ministry of Industry and Information Technology (MIIT) said last month.
Steelmakers have been told to shed 100 million to 150 million metric tons of capacity over five years, the equivalent of 12-18 percent of China's output in 2015.
Old mines to close
The coal industry will close 1,000 outdated mines this year, or about 9 percent of China's total, according to the National Energy Administration (NEA). The combined capacity of 60 million tons may represent less than 2 percent of production last year.
But planned cutbacks in coal are expected to grow to 500 million tons in the next three to five years, the official Xinhua news agency said. The target would be about 9 percent of estimated production capacity.
It is unclear whether cuts of that size will have a significant effect on China's producer prices after four years of declines. But the government has also been on the defensive over the potential impact on jobs.
"As China strives to elevate its economic growth model, job losses will be an unfortunate but necessary side effect," Xinhua said in a commentary on March 1.
On Feb. 29, Yin Weimin, minister of human resources and social security, told reporters that 1.3 million coal miners and 500,000 steelworkers would be laid off due to the restructuring.
Yin said China's overall employment will remain stable this year, but he added that keeping people employed will be a "very difficult task."
Based on official statistics, the cuts in steel and coal that the government has outlined so far would have a relatively small impact on total employment.
Yin said China has created 13 million new urban jobs in each of the last three years. But the official English-language China Daily reported that the outlook is "grim" for 7.65 million university graduates entering the job market this year.
In his work report to the National People's Congress (NPC) this month, Premier Li Keqiang said the government's goal for this year is to create at least 10 million new urban jobs.
At the end of 2015. China's total work force stood at 774.5 million, the National Bureau of Statistics (NBS) said. On paper at least, the coal and steel layoffs would affect less than 1 percent of the work force.
The government has established a 100-billion yuan (U.S. $15.4-billion) fund to help idled workers find jobs with training and "other services" over a two-year period, said MIIT Vice Minister Feng Fei.
Separate Xinhua and China Daily reports said the funds would be used to "assist" or "relocate" those who lose jobs.
Construction cutbacks seen
Thomas Rawski, a China scholar and University of Pittsburgh professor of economics and history, said the coal and construction-related industries with the worst overcapacity problems probably employ 10 million workers in total, exclusive of construction itself.
In the worst case, capacity reductions might eliminate 5 million jobs, he said.
While the impact could be serious in some regions, the layoffs would pale in comparison to the cuts of at least 40 million jobs during the consolidation of state-owned enterprises (SOEs) in the 1990s under former Premier Zhu Rongji, Rawski said.
That larger restructuring shut down an estimated 60,000 enterprises. Capacity cuts are likely to be limited by concerns about such major job losses now, he said.
Coal and steel producing regions will feel the greatest effects of the cutbacks. "But these are not national crisis signals," Rawski said.
Even so, the extent of construction cutbacks could be more troubling, since construction activity affects larger numbers of workers throughout China.
The country's stalled housing market has been a major source of China's slowdown.
At the end of last year, the backlog of unsold homes stood at 719 million square meters, enough to house nearly 24 million people, Xinhua reported last month.
If homes under construction are included, the total would climb to 5.87 billion square meters, an inventory that would take at least five years to absorb, according to the Bank of Communications.
The total backlog would be enough to house 195 million people, based on a living space formula used by the Ministry of Housing and Urban-Rural Development.
Rawski said the impact of the construction downturn is hard to predict because central and local governments may respond by boosting stimulus spending and infrastructure projects.
The problem is that the impact of the capacity policies will be hard to measure because official statistics have been unreliable.
Last month, The New York Times reported comments by several analysts on China's "data and information censorship."
"Data disappears when it becomes negative. That's happened in a lot of series," said Anne Stevenson-Yang, co-founder of Hong Kong-based J Capital Research.
In the steel industry, for example, Stevenson-Yang said that official production reports from the Ministry of Commerce randomly change the number of companies in reporting samples, making comparisons invalid.
"They added all these phantom companies that nobody had heard of before," said Stevenson-Yang. "They don't tell you about this change upfront. They'll only tell you if you ask them."
In coal mining, government and industry reports frequently cite partial or conflicting results that may vary by several hundred million tons.
Last month, the National Bureau of Statistics (NBS) reported that coal consumption fell 3.7 percent last year without giving a tonnage figure, Agence France-Presse said.
Labor statistics are another case in point.
For years, the NBS has reported a registered urban unemployment rate that has remained virtually unchanged since at least 2006.
"Those figures are meaningless. They only cover people with urban residency permits. The impact, if any, on migrant workers is not included," Rawski said.
The rate stood at 4.05 percent at the end of 2015. But during the past decade, it has moved only slightly within the range of 4.0 to 4.2 percent, since it ignores unemployment among China's 277 million migrants.
Urban rate uncertain
In 2010, the National Development and Reform Commission (NDRC) planning agency acknowledged that the registered urban rate "may not represent the overall situation," China Daily reported four years ago.
In 2014, the government said it would start publishing a more inclusive survey-based unemployment rate, but it has continued to use the urban registered figure.
The government has said it will keep this year's urban unemployment "within 4.5 percent," virtually assuring that the limit will not be breached.
The result of the statistical fabrication and foot dragging is that it will be hard to determine the effect of capacity cuts on either the targeted industries or jobs.
"The conclusion is that it's going to be even more difficult than it has been all along to tell what's going on," Rawski said.
In its annual report to the NPC on March 5, the NDRC cited "layoffs and hidden unemployment within some enterprises and industries."
But the agency provided no new specifics on plans for capacity cuts or their impact in the coal, steel, and "other industries."
"When addressing the issue of overcapacity, priority will be given to ensuring proper arrangements are made for workers who are laid off, and funds for rewards and subsidies will be set up to ensure they are resettled and provided with employment," the report said.