The demand for rice has always been high as people view it as a staple food. 
However, the pandemic has led to a significant impact in China's rice market as supply of rice decreases and the price of rice increases. This has led to consumers seeking for alternatives in other Southeast Asian markets. However, most Singaporeans can still cope with the price surge and the demand for China's rice remains high. Thus, rice is considered price inelastic.

Back in February, the surveyed jobless rate stood at a whopping 6.2% , afterwards fluctuating and ultimately declined steeply to 5.2% in November, which is equivalent to a 15-20% increase in the total number of unemployed people based on the National Bureau of Statistics (NBS).

China’s official jobless indicators are released on a monthly or quarterly basis, but there are some downsides to it. These indicators only mentioned urban unemployment, but there were no mentions of rural. For instance, the 6.2% in February is only representative of urban areas. (China's unemployment rate graph attached at the bottom for reference)**

The results shown will not be very comprehensive as the system ignores149 million self-employed business owners and nearly 300 million migrant workers, who regularly travel from their rural hometowns to find employment in urban areas.

Hence, the the survey data probably only accounts for 60% of the total workforce. Therefore, it is hard to gauge the real state of China’s unemployment situation as the system used only covers a part of the workforce.


Main Reasons for the rise in unemployment rate & Impact on Workforce

There was a significant decline in employment under the tourism and service sector, as well as slower employment in large enterprises as a result of the COVID-19 pandemic and a slow down in foreign trades.

Declining employment in the tourism and service sectors contributed to the worsening employment image of China. For the first half of the year, total retail sales of consumer goods fell by 11.4%, and since the tourism and hotel sectors were badly hit as well, the domestic tourism revenue was barely equivalent to just 31.2 percent of last year’s numbers.

Additionally, China's foreign trade was also badly hit for the first half of the year. But as China took the lead in resumption of work and production globally, the total imports and exports are down just 3.2 percent year-on-year.

Furthermore, the vast majority of industrial workers in China are migrant workers and their main source of income comes from employment in urban areas, in manufacturing or service jobs. During this crisis, migrant workers may experience recipitous drops in income.

To add on, the China government has strict requirements that employers has to follow if they were to hire a full-time worker, where the employers has to provide insurance schemes that covers pension, health care, unemployment, work injury and maternity leave – as well as a housing fund for every employee.

These harsh requirements that the employers has to adhere, would cost them a fortune if they were to hire a worker, nonetheless to say hiring thousands of workers. This leads to employers or companies to hire temporary or under-reporting salaries to get away from the law. This means that most of the workers are not full-time workers and are very vulnerable to losing their jobs anytime. In addition to the pandemic, companies are not able to operate at maximum capacity and earn big profits, or worse still losing money. For companies to keep themselves alive, the first thing they will do is to sack or fire workers, especially temporary workers to lessen their expenditure and save more money and this leads to many more being unemployed.

The number of temporary jobless workers in China in 2020 could have ranged between tens of millions and 250 million.
(Based on rough estimates)**

Impact on China's Economy

China posted its first economic contraction in more than 40 years during the first quarter of 2020 when it was badly hit by COVID. After the outbreak, the already difficult task of stabilizing employment became more complicated and harder to manage. 

China would be said to have experienced Cyclical Unemployment. Cyclical Unemployment is caused by the lack of jobs during a recession. It is undeniable that the outbreak of COVID has plunged the global economy into a "recession". China, as the first country to experience the outbreak, was badly hit many people started losing their jobs due to companies closing down, tourism and hospitality facilities are banned from usage, as well as many retail workers suffering job losses from the lockdown and quarantine  measures. 

With a number of unemployed people already out there, the COVID outbreak caused a significant rise in the surveyed unemployment rate. As a recession hits China, the production of goods and services will decline and the demand for input (eg. labour) will go down.

Impact of COVID on Rice Production

In terms of staple grains such as rice, the pandemic shocked the early rice most in China. February and March, the worst time of the pandemic, are the sowing period of early rice. Some lockdown policies have delayed seeding and transplanting of early rice in South China for about 10 days, and farmland plowing in Central China. 

Additionally, the risk of production reduction raised concerns among the government and the public. China's huge population resulted the demand for staple grain to be very inelastic. Reduction in supply of rice a a result of delayed seeding and transplanting of early rice may lead to soaring prices. Worse still, this pandemic may accelerate the shift of the rice cropping system from the “double seasons” to “single season”, which is believed to be a threat on the total production in the long term. 

 Furthermore, due to the COVID-19 Pandemic, the production costs for rice are on the rise. In a survey with 22 representative grain producers and farmers, it was claimed that the price of pesticides and fertilizers increased by 200 yuan per ton, 20% higher than the prices before the pandemic. Similarly, cooperatives in Fujian province also claimed that the price of pesticides and fertilizers increased by 20%, and the price of seeds increased by 10%. Without enough money, farmers will have no incentives and capacity to continue farming. 

 For the foreseeable future, China will be required to have a GDP Growth rate of around 5% for 2020 in order to stabilize employment. However, at the moment, this is something hard to achieve.

A higher GDP means that more goods and services have been produced, which shows that the economy is growing.

China's Overall Economy
China has been among the world's fastest-growing economies, with a GDP of USD14.4 trillion and real annual GDP growth averaging 6.11% in 2019, a pace described by the World Bank as 'the fastest sustained expansion by a major economy in history'.

There has also been a rapid increase of the GDP per capita from 2000-2019. The country's GDP per capita was below USD1,000 in the year 2000 and the GDP per capita reached USD10,276 in 2019. The primary reason for this quick growth was the greater buying power as the economy has been boosted by the increase in manufacturing and consumption.

However, after four decades of stellar growth, China's economy is having a bad year as it face hits from the COVID-19 pandemic.

China experienced an economic recession of 6.8% in the first quarter of 2020 due to the lockdown efforts that halted production of goods and services. However, having been first into recession, China was first out. Because China implemented a stringent lockdown at the beginning of the pandemic, factories were able to reopen relatively early in the year and resume production. The increase demand for personal protective equipment (PPE) and electronics has boomed in China as many of its Western trading partners endured pandemic-induced lockdowns. As a result, China's economy grew by 3.2% in the second quarter and 4.9% in the third quarter of 2020.

As China's economy recovered quickly from the economic recession in the first quarter of 2020, it experienced a "V" shape recovery which shows the effectiveness of the government policies and the early lockdown measures.

Rice Production in China
Rice production in China is an important part of the national economy as it accounts for 30% of all rice production. In the past two decades, the market has been growing at a fast pace, with rice production reported to be 209.61m tons in 2019.

However, early rice yields in the first quarter of 2020 fell as continuous heavy rains hit some regions in the south, destroying all crops on farmlands. Additionally, the impact of the pandemic induced lockdown and labor shortages delayed the supply of planting of early spring food crops, such as rice.

Despite that, production of rice in the following months increased and came after Beijing doubled down on its focus on food security, urging farmers to finish spring planting on time even as it was emerging from a coronavirus-led lockdown in the first quarter of the year. The area planted with rice increased more than 5% after the government stepped up its support for China's staple food crops after the pandemic began.

As a result China's rice output increased by 1.1% from 209.6 million tonnes in 2019 to 211.86 million tonnes in 2020.

Hence, the effective government policies and support to the agriculture sector contributed to the surge of China's rice production after a challenging start. This increased the overall output produced by China in 2020, which aid the country's recovery from an economic recession.