The Chinese government estimates that the global recession threw some 20 million of the country's migrant laborers out of work. Many of them were employed in the more developed coastal regions, where factories produce consumer goods exported around the world.
The government was afraid the unemployment would lead to serious unrest, but that hasn't happened — in large part because inland areas have absorbed some of this surplus labor.
Wanzhou, a major port on the Yangtze River, is one such place.
For a generation, Wanzhou has been sending its idle farmers to cities across China to work as construction workers, nannies and factory employees. Late last year, that began to change. Thousands of those workers streamed home to Wanzhou as the recession started to bite, and the Chinese New Year holiday loomed. Many chose not to return.
Wang Huizhen left her job in a factory making handicrafts for export in southern Guangdong province. Higher incomes for migrants have often come at the cost of separated families, so as business slowed she began to think of her daughter.
"My parents have raised our child since she was small, and now she is in middle school. Her father is still working away from home. For the sake of our family, I decided to take a job with less pay and help my child with her studies," Wang says.
Wang's relatives found a job for her working in a small hotel in Wanzhou. She says she is making half of what she was paid at her old factory job.
"If my child weren't in school here, I would consider going back to the coast to work again, because they pay a lot higher. Here at home, I can just make enough money to get by, but it's not enough for a really good life," she says.
Robust Labor Market
Wang Tao spent most of the past nine years printing designs on toys at a factory in Guangdong. He has learned a bit about how to manage a business. But he sees no room for career advancement in Guangdong, and so he has returned to Wanzhou to start his own company.
"Usually, people like me can only be low-level managers, very low. It's almost impossible to make it into the mid levels," he says. "The bosses fill the mid and high levels with their own people. They won't use outsiders."
Wanzhou is offering incentives to lure both big companies — and skilled migrants like Wang Tao — to open local businesses and create jobs. Wanzhou recently announced a milestone of sorts: the opening of the city's first laptop computer factory.
All this has helped create a labor shortage in Wanzhou, and Xiang Wenbo is profiting from it. He recently established a local association of labor recruiters.
"We're now suffering shortages of workers here. Even though we're a big labor-exporting region, economic growth is speeding up and local firms need more new hires. Our fees for introducing employees to companies have gone up steeply," he says.
Migration Slowing, Not Stopping
But rural Chinese still look to the coastal factories for work. Huang Yasheng, an economist at MIT, says about 70 percent of migrant workers returned to the coast to find work after the Chinese New Year, while 30 percent stayed home.
"It's not that there's a flow of migrant labor back to the countryside, but the pace of the out-migration has slowed substantially since 2005," Huang says. "That's probably the most important thing that has saved China from the financial crisis."
He says that if inland areas like Wanzhou had not been able to take in so many migrant laborers, China might have been stuck with 30 or 40 million unemployed migrants instead of 20 million.
After all, Huang points out, most Chinese still live in the countryside. He adds that China is now trying to rebalance its economy by getting people to invest and export less and consume more. Huang says that raising rural incomes, including those of migrant laborers, will be the key to making it work.