China’s economic recovery is at an intersection. It can either fix a two-tier society with thinly spread growth, or it can embrace inclusive growth that lifts all boats.
China’s economic recovery is at an intersection. It can either fix a two-tier society with thinly spread growth, or it can embrace inclusive growth that lifts all boats.
By Mehmet Enes Beşer
China’s economic rebound since the pandemic has been patchy, paradoxical, and sometimes misleading. While macroeconomic metrics—exports, manufacturing production, and state-led infrastructure investment—blink flashes of strength, the foundation of the rebound remains weak. Maybe nowhere is that weakness more evident than in the country’s treatment of its 300 million migrant workers. These workers, who have driven China’s urbanization miracle and maintained its global manufacturing advantage, are increasingly being left out of the spoils of the rebound. If China really wants a resilient and inclusive recovery, it cannot leave behind this vast pool of labor.
Chinese migrant workers are in a specific socio-economic category. Legally categorized as “non-residents” in the urban cities where they labor in the hukou (household registration) system, they are neither wholly urban nor rural, nor wholly formal nor informal. They build skyscrapers, serve in restaurants, produce electronics, package parcels, and clean offices—without enjoying equal rights to healthcare, education, and social security in the cities they contribute to supporting. Their work is vital but structurally undervalued.
As COVID-19 closed down a lot of China, migrant labor bore the majority of the hardship. As white-collar workers might work from home, or workers in the state sector were maintained on payrolls, migrant workers were often jobless, enjoying neither severance nor job security. They returned to their hometowns in the countryside, and local economies were not much in a position to provide them any opportunities. The state’s reaction to the pandemic emphasized macroeconomic stability—gigantic infrastructure schemes, credit expansion for state enterprises, and relief from taxation for exporters—but left relatively little for generating employment in labor-intensive sectors. Even now, with growth back, the work-relief programs intended to assist these workers allegedly reach fewer than 1 percent of their number. That statistic is not just a policy failure; it is an ethical outrage.
The structural abuse of migrant labor is not a humanitarian issue—it’s a trap of development. China’s transformation into consumption-driven development from investment-driven growth rests on the rise in disposable incomes of its working class. That can’t happen if a sizable percentage of that class remains mired in low-security, low-wage jobs. Consumer spending cannot rise substantially when workers do not know what tomorrow will bring or have medical and education outlays in cities where they are not entitled to residency rights. The contradiction between China’s vision for consumption and labor policy is one that undermines long-term sustainability.
Moreover, migrant workers are essential to the dynamism of the very cities that now keep them in second-class residence. Without delivery drivers, garbage men, construction gangs, and kitchen cooks, urban life would cease to function. But these very same workers are often denied low-cost housing, decent schools for their kids, and equitable health care. Such exclusion is not only unjust—It’s also a waste. It produces a two-speed city society, generating anger, instability, and wasted human potential.
Beijing has acknowledged some of these issues in words, if not always in practice. The idea of “new-type urbanization” attempts to integrate migrants more fully into urban society. Pilot hukou reforms have been implemented in chosen second-tier cities, and more and more there is an awareness that domestic demand, rather than export surpluses, will fuel the next round of growth. But there has been sluggish, uneven, and budget- and bureaucracy-limited implementation. Cities are nervous about the cost of expanding public services to migrants, and rural areas fear losing working-age individuals and remittances.
This policy shift is dangerous. With youth unemployment at record highs and automation hanging over labor-intensive sectors, China needs to engage all its human capital more urgently than ever before. Denying the migrant workers any voice—or reducing them to permanent precarity—undercuts that goal. In addition, their disenfranchisement is a social time bomb waiting to go off. As rural-urban inequality is preserved and social mobility stalls, the Chinese development model comes under threat.
How can inclusion be made operational? First, China must accelerate reform of the hukou system so that it raises social protections without shattering municipal budgets. Central government fiscal transfers can compensate cities that absorb large numbers of migrants. Second, the country needs an employment strategy that focuses on employment in labor-intensive industries, especially in services and green technologies. Infrastructure projects should not necessarily be capital-intensive megaprojects but also small-scale, community-based urban upgrades that provide jobs for low-skilled workers.
Third, vocational training and upskilling must be offered to migrants. China has high hopes of transitioning to green and high-tech industry, but this will be meaningless unless it includes workers of all kinds. Investment in training employees must be paired with protection of labor rights and enforcement of minimum wage legislation.
Finally, migrant workers must be politically and institutionally acknowledged as at the center of China’s future, not artifacts of an old industrial past. This requires policy change but also a shift in popular discourse—a remaking of the migrant worker not as temporary stranger but as citizen, as neighbor, as contributor to the public good.
China’s economic recovery is at an intersection. It can either fix a two-tier society with thinly spread growth, or it can embrace inclusive growth that lifts all boats. It is not just a matter of GDP figures—it is a matter of the kind of society China wants to build over the next couple of decades. Forgetting the 300 million is not only folly—it is suicidal. An economy that marginalizes its most essential workers is an economy that sabotages its own future.