China's clandestine tactic in the commercial conflict

China's clandestine tactic in the commercial conflict

Ride the Gig Economy Wave: How China's Underdogs Are Showcasing Resilience Amidst Trade Tensions

In the face of a staggering 145% tariff siege on its export machine, China's job market trembles. Millions of workers, estimated at around 16 million by Goldman Sachs, are part of the workforce involved in export production for America. Banks like Nomura forecast a short-term unemployment uptick of 5.7 million and a long-term impact of nearly 15.8 million due to the trade shockwaves rippling through China's economy.

China's leaders have jumped into action, vowing to increase unemployment insurance payments for firms hit by the tariffs at a recent Politburo meeting on April 25th. However, the labor market's knight in shining armor is none other than the sprawling gig economy, which could round off the sector's metamorphosis from a skeptically-viewed free-for-all to the world's largest state-sanctioned electronic labor market—and one boasting a strong safety net.

The Communist Party's newfound appreciation for the gig economy stems from its sheer size. The state-controlled trade-union federation estimates there are 84 million people relying on "new forms of employment," including delivery services and ride-hailing. The government acknowledges a broader category of 200 million "flexible workers," encompassing self-employed individuals and part-timers—a figure far exceeding the 54 million jobs in city-based state-owned enterprises and making up a significant chunk of China's 734 million-strong labor force.

A typical figure is Mr. Wan. At 36, he determined the highest-paying job within reach was that of a food delivery driver, forking out long hours on his scooter from 6 a.m. to 9 p.m. daily. "Every penny matters right now," he remarks. Delivery workers, famously portrayed in the recent film "Upstream", are increasingly in the limelight.

Amazingly, despite trade skirmishes and decades of sluggish consumer confidence, China's gig economy continues to grow. Meituan's workforce, mostly managed through third-party contracting firms, has expanded by 41% since 2021. The firm anticipates strong growth in food and shopping delivery, aiming for annual expansions of around 15% until 2027. Meanwhile, the number of ride-hailing licenses has snowballed from 2.9 million in 2020 to 7.5 million in 2024.

But better yet for China's leaders, an intensive struggle amongst competitors for market dominance has triggered a hiring blitz, landing right in the middle of the trade war. Last April, e-commerce giant JD.com pledged to onboard 100,000 new drivers by the end of July. Share prices have dipped as a result of these price cuts and increased labor costs, but more jobs and some form of safety net are precisely what the party wants.

The gig economy's miracle-cure properties seem to be propelling the rehabilitation of the companies driving it. Once dismissed as an "ordered expansion of capital" and "castles built on sand," gig economy platforms are now subject to a broader crackdown that began in 2020. Yet, China's leaders have realized that jobs and consumption hold considerable weight. Li Qiang, the prime minister, praised the platform companies for their "increasingly prominent" role in demand and employment as early as 2023. Now, the government is embracing the gig economy as a economic buffer.

To show its commitment, the government is even egging on gig economy companies to establish a shadow welfare system. Around February 2025, JD.com, for instance, proposed offering social security benefits to its drivers, while Meituan aims to provide security for its couriers starting with a second-quarter 2025 pilot scheme. Desperate to impress, firms are investing in rest stations, meals, and subsidies for drivers—all in plain view of the government.

However, who bears the financial burden remains a significant question. Pensions and medical insurance sound enticing to workers, but potentially burdensome if they come straight out of paychecks. JD.com insists it will shoulder both employer and employee insurance premiums, but skepticism abounds on social media.

In Quanzhou, where Meituan piloted a second-quarter 2025 pension reimbursement scheme for eligible drivers, 30-year-old Mr. Lai expresses apathy. Sitting on his scooter outside a mall, he says, "When we're old, the workforce will be even smaller, and the pension contributions they pay won't suffice for my generation." If the social cost on gig economy firms becomes unbearable, they may have difficulties coping financially—resulting in share price drops. The state must protect gig workers' flexibility and explore novel methods to redistribute income, advises an economist. Otherwise, the disappearance of consumer-tech companies could parallel the job losses, mirroring the disruptions caused by the trade war in manufacturing employment.

In the long run, technology poses a threat to the gig economy's capacity for job creation. Meituan is experimenting with delivery by autonomous vehicles and drones, which have reportedly completed around 4.9 million and 1.45 million consumer orders, respectively.

All in all, China's gig economy, much like the broader Chinese economy, has felt the weight of the trade war. Yet, the resilience of gig workers and the adaptability of businesses indicate that these underdogs will continue to persevere, and the Chinese authorities will likely continue to adapt to this changing landscape.

1. The stock market in India might take notice of the unfolding events in China's gig economy, as the industry continues to grow despite trade skirmishes.
2. The government in India, keen on promoting businesses and job creation, could learn from China's approach towards the gig economy, especially in providing a safety net for its workers.
3. Financial institutions in the international market, with a focus on Asia, might look into investing in Chinese gig economy companies, given the government's support and the sector's resilience.
4. The resilience shown by China's gig economy workers could also draw attention in the general-news sector, as their stories of perseverance amidst challenges might inspire others across the globe.
5. Politicians in India, with an eye on boosting the domestic economy, could explore adopting policies that foster a thriving gig economy, similar to what China is doing, to encourage job creation and entrepreneurship.
6. The integration of technology in China's gig economy could spark an interest in the technology sector, particularly in India, where researchers could study the impact of autonomous vehicles and drones on job creation and efficiency.
7. Businesses in India, especially those in the technology and finance sectors, might find opportunities in collaborating with Chinese gig economy companies, as they navigate the challenges and reap the benefits of this evolving landscape.

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