The booming sharing economy in China and its positive effect in stimulating employment

The booming sharing economy in China and its positive effect on stimulating employment

                Danzhuo NIE

The term collaborative consumption was proposed for the first time by Felson, professor of sociology at Texas A & M University, and Spaeth, professor of sociology at the University of Illinois in 1978. The sharing economy is fundamentally a cooperative mode of consumption that separates ownership and the right of usage. The owner lends or rents unused property, including cars, housing, sports equipment and anything you can imagine to maximize the use and benefits of the items. The main feature of this business model is the achievement of a direct exchange of goods and services between individuals through a third-party market platform based on information technology. In this mode, everyone can become a producer and a consumer at the same time and be able to generate income. We can say that it is a new type of economy and a new way of resource allocation.

According to a survey carried by CNNIC (China Internet Network Information Center), 77 out of 100  Chinese used sharing economy platforms in 2016.“Total transactions in the sharing economy reached 3.450 billion yuan in 2016, more than double of the reported figure in 2015, and it involved more than 600 million people," said HUA Chunying, a Chinese spokesman at a press conference. In 2017, China's sharing economy grew by around 40 percent to 4.5 trillion yuan (about 680 billion US dollars). The sharing economy today is present in almost all sectors in China -- bikes, automobiles, sports equipment, umbrellas, etc.

Why did this economic model develop so fast worldwide?

After the economic crisis of 2008, the global economy declined sharply, which caused a contraction of global demand, intensified the overcapacity crisis and caused a wave of unemployment. People started to put houses, cars, and unused property on online platforms to make money or trade things. In times of economic downturns, people were trying to rent their unused resources to those in need to save the cost of living.

In recent decades, the environmental problem has attracted global public concern. Moreover, numerous advances in technology have solved the difficulties of matching supply and demand, for example, cloud computing, big data, online payment technology, and LBS (Location-based services) technology. The birth of new values and the development of new technologies have jointly favored the advent of the sharing economy.

The most impressive product -- Shared bikes

As an original product of China, the shared bike is another great innovation in the field of transportation after the online car-hailing service and became the sharing economy's brightest star in 2017. The total amount of financing in the shared bicycle reached 25.8 billion yuan in 2017.

At the end of 2017, the number of shared bicycles in the world exceeded 23 million yuan. The number of registered users was close to 400 million, and the cumulative order volume exceeded 11.5 billion. This covers 304 cities in more than 20 countries and 74 companies have entered the market. In the cycling industry, the aggregate investment reached 20 billion yuan in 2017.

The sharing economy generates a significant increase in employment

The number of people participating in the sharing economic activities in China exceeded 700 million in 2017 and the number of people involved in providing services was about 70 million, with an increase of 10 million over the previous year.

In 2017, the number of employees of China's shared economic platforms was about 7.16 million, with an increase of 1.31 million over the previous year, accounting for 9.7% of the number of new urban employees (135.44 million) in the year. That is to say, 10 out of 100 new employees in urban areas are newly hired by companies in the sharing economy. The sharing economy plays a significant role in stimulating employment.

The sharing economy has strongly promoted inclusive growth, and its role in re-employment of workers in overcapacity industries and employment of labor in poverty-stricken areas has begun to emerge. Specifically, Didi Chuxing (the largest taxi-hailing service provider) has provided 3.931 million jobs for employees in industries which need reducing excess capacity (such as coal, steel, cement, chemicals, non-ferrous metals, etc.) and 1.78 million jobs for demobilized soldiers. It helped 1.33 million unemployed people and 1.37 million zero-employment families to be re-employed on its platform. In the field of life services, at the end of 2017, the number of active riders of Meituan's take-out distribution exceeded 500,000, of which 156,000 were formerly workers in traditional industries such as coal and steel, accounting for 31.2%, 46,000 were from poor counties which account for 9.2%. 

(The source of statistics:  " The Report on Chinese sharing economy in 2017", made by Administration Center of China E-government Network and Internet Society of China )