In this paper the author argues that the Chinese economy is currently witnessing some developments that have given rise to unsustainable trends. Informalisation of labour and the general rise in unemployment (along with decreasing employment elasticites) has given rise to greater inequality and poverty in China which has resulted in lowering of consumption rates in the Chinese economy. This is mainly a result of the changing ownership patterns in China where the State Owned Enterprises have made way for private ownership, many of which are actually foreign owned enterprises. As a result, the economy is currently falling prey to the global phenomenon of jobless growth, as the socially sensitive economic policies of the country are being seriously handicapped by the new developments. The author suggests strengthening of the State as the solution to arrest such developments.

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March 10, 2007.