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Home > Blogs > Economy Watch > China’s New Wave of Economic Immigration

China’s New Wave of Economic Immigration

Chinese Economy | China’s New Wave of Economic Immigration Economy Watch

Since China opened up its doors to the world a few decades ago, we’ve witnessed what has been a remarkable Chinese growth spurt. Today, China has the second largest economy in the world, the largest bank by market capitalization, and also the largest population of 1.34 billion in the world. As its economy continues to run full steam ahead, it is unsurprising that China is grappling to contain a massive influx of foreigners, both skilled and unskilled, who want a slice of its growing economic pie.

China’s political, economic and social landscape has evolved dramatically in the past few decades, changes that have no doubt had an impact on its demographics and altered the realities of both outward and inward migration to the country. The Chinese Diaspora is one of the largest in the world, with the World Bank ranking it the fourth largest country of emigration in the world, andan estimated 8.3 million China-born people living outside of the Mainland in 2010.

While the economic downturn has marked a decline in temporary labor migration flows by about 36 percent, the OECD believes that “with the first signs of economic recovery, however, there is little doubt that migration for employment purposes will be picking up again.” According to the OECD, the emerging economies of China and India now occupy the first and third places on the list of origin countries of immigrants to the OECD area.

Chinese students have also contributed much to the outward migration phenomenon. In 2009, China was the principal source of foreign-born students to the two main destinations for international students, namely the United States and the United Kingdom. Not surprising, perhaps, given the country’s 1.3 billion population and the new generation of wealthy elites.

However, a new trend of inward migration into the fast-developing country is emerging.

According to the report, China: An Emerging Destination for Economic Migration, “the driving force behind the recent trend of immigration into China has been the country’s rapid economic growth, compounded by its passage through a demographic transition.”

While China’s outward migration pattern can be attributed to its massive population and growing pool of wealthy elites, the author, Ronald Skeldon of the University of Sussex, points out that “China is presently going through one of the most sustain phases of economic development in its history; one that is associated with slow population growth and low-fertility.”

According to China’s 2010 preliminary census results, the average annual population growth between 2000 and 2010 was a mere 0.57 percent, while the country’s population is ageing at a much faster pace: In 2010, the proportion of people over the age of 60 was 13.3 percent, compared to 10.4 percent in 2000. At the same time, the growth of the working-age population (age 15 to 64) in China is projected to decline, from 0.95 percent per annum between 2005 and 2010 to 0.19 percent per year from 2010 to 2020, and to -0.23 percent annually between 2020 and 2030.

What this implies is what Skeldon refers to as the end of “the era of surplus labor in China.” Skeldon, in particular, believes it is the cause of a structural labor deficit, evidenced by the two million job vacancies that were reported in southern China in 2004, the rise in number of illegal imports of cheap labor from neighboring countries, and the 2.9 million foreigners registered with the Ministry of Public Security as working legally in China in 2007.

Once a huge source of economic migrants to other countries, the rise in the number of foreigners coming to work in China is a reflection of how quickly the country is moving up the global economic chain.

“Judging from the history of western developed countries, inward migration flows often reveal the appeal of a nation”, said Zhang Jijiao, a migration expert with the Chinese Academy of Social Sciences.

Although the latest figures have not been released, the Bureau of Exit and Entry Administration said that more than 10 percent of the 26.11 million foreigners that entered China in 2007 came for employment purposes, of which more than half a million were workers in joint-ventures or wholly foreign-owned firms. In 2008, Shanghai recorded 152,100 resident foreign workers – a 14.1 percent increase from the previous year.

As the Chinese labor force shrinks and ages, China’s role as an emerging destination for economic migration provides the necessary conditions for the country’s sustained development, growth and globalization. However, Frank Pieke of the University of Leiden warns that China desperately needs more stringent controls and restrictions to its immigration flows. He wrote:

“China’s wealth and stability have made it an attractive destination not only for skilled professionals and business people from developed countries, but also for people without immediately marketable skills, many (but by no means all) of whom come from countries poorer than China itself. This has already sparked large inflows that in many cases have led to the growth of residentially concentrated ethnic communities. As a result, China is beginning to be confronted with issues that other destination countries have grappled for much longer, yet it still lacks a clear legal and administrative framework and apparatus to deal with the entry, residences, and employment of foreigners.

China, moreover, expects to play a leading role in the world. It accepts that this quite naturally attracts foreign immigrants to its shores; even more, China acknowledges that its further development and globalization requires the presence of foreigners both as temporary visitors and more permanent residents. On the other hand, the growth of a ‘foreign floating population’ is considered a burden on Chinese society, while immigration is also associated with terrorism, subversive activities and international organized crime. As a result, an increasing emphasis on control and national security in addition to service and equal treatment is to be expected.”

While everyone wants a slice of China’s growing economic pie, Pieke’s comments offer an alternative insight to China’s immigration reality – China has to tighten its migration management policies, reconsider the legitimacy of excess economic migration or risk the harsh implications on its social and cultural fabric.

This article was written by Michele Lin and originally published on Economy Watch on 12/02/2011 under the title China’s New Wave of Economic Immigration

Further reading on the Chinese economy:

  • Human Mobility and Economic Development: Why Migration Makes Sense , by Ian Goldin and Geoffrey Cameron

  • Anthony Bolton takes a hammering but remains upbeat about the future of China, by Ian Fraser

  • IMF raises red flags about China's financial system, by Ian Fraser

  • Are Asian economies sacrificing happiness for development?, by Michele Lin

  • Tags: banking , China , corporate governance , credit rating agencies , European Central Bank , financial crisis , inflation , international differences , regulation
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