China Cuts Nearly 2 Million Coal and Steel Jobs

By Kayla Matthews

China is getting a taste of what the rest of the world went through during the Great Recession.

Due to slowing growth and an uncertain future, China is cutting around 1.8 million jobs in the coal and steel industries and relocating the workers to other industries. By laying off 15 percent of the workforce, authorities hope to reduce overstaffing in these bloated industries.

The ramifications of these layoffs are huge from an economic standpoint. From an environmental perspective, the planned layoffs represent a big opportunity for China to continue investing in green energy instead of coal.

The U.S. and China

During the highs of the Great Recession, Chinese companies weathered the storm fairly well thanks to massive government stimulus, while the American and European economies struggled. Now, economic problems are catching up to China as the rest of the world recovers from that downturn.

China’s fast economic growth has long been the envy of the developed world. That’s no longer the case, as the country experienced the slowest economic growth in 25 years. The 6.9 percent GDP growth for 2015 is something that most countries would do anything for, yet the first signs of an economic slowdown in China have worried authorities.

As the Wall Street Journal reported, Chinese officials believe high personal debt combined with too many factories and housing means 2016 will be difficult. They downplay fears, of course, but are bracing for further challenges. The layoffs, as painful as they might be, are needed if China wants to get its economic house in order.

Manufacturing at the expense of the U.S. has long been strength of China, yet the U.S. shows some signs of improving. Unemployment in the U.S. is the lowest it’s been in seven years, with the manufacturing industry beating expectations. Construction and roadbuilding jobs in the U.S. are also offering much-needed benefits and securities, but China also has many opportunities for jobs in this industry.

Environmental impact

Coal is cheap and plentiful throughout China, making it the energy source of choice throughout the nation. Just how much is coal used? The U.S. Energy Information Administration (EIA) reports that 66 percent of China’s energy comes from coal. Another 20 percent comes from oil. By comparison, 39 percent of America’s energy comes from coal.

These inexpensive sources have helped China meet growing demand. As any resident of the world’s most populated country can attest to, these energy sources come with a steep environmental price.

China’s massive coal industry has long been one of the factors blamed for the poor air quality that plagues Beijing and other parts of the country. Partly due to the widespread use of coal, China is the largest CO2 emitter on the planet, according to the U.S EIA. Fixing the horrible air quality in many parts of the country has become a priority, both for health reasons and to appease upset residents.

To do this, authorities set a number of energy-related goals. By 2020, the Chinese government hopes to limit coal use to 62 percent of energy consumption. By 2030, the government plans to raise energy from nonfossil fuels from 10 percent to 20 percent of all consumption. The U.S. EIA reports that China hopes to cut its carbon emissions by a third in the next 15 years.

It’s an ambitious plan, especially because the government feels pressure to balance the need for economic growth with a clean, healthy environment. The recently announced layoffs, as painful as they might be for the near-term future, are a positive sign that China is thinking long-term. By reducing the coal industry, China has shown that it’s more unwilling to misallocate resources simply to keep people employed than before. This is good news for both the environment and China’s economy.

Image by Igor Trepeshchenok

Kayla Matthews is a healthy living writer and blogger who writes for The Huffington Post and The Climate Group. Follow her on Facebook or at ProductivityTheory.com.