The number of unemployed workers across Asia is set to soar to a staggering 97 million this year, according to the International Labour Organisation (ILO).
But this falls short of its “worst-case scenario” – which is that the numbers could rise to 113 million.
China is being badly hit. Over 600,000 small and medium sized firms closed last year, throwing millions out of work and leading to mass migration of the unemployed from the towns back to the countryside.
The Chinese government is increasingly worried about the “social unrest” that mass unemployment could lead to.
Wen Jiabao, China’s prime minister, acknowledged the “big impact” of the recession on China at the World Economic Forum in Davos last month.
China’s government has tried a number of measures to limit the impact of the crisis – including implementing a $586 billion stimulus package, directing banks to up their lending, restoring export tax rebates in the textile industry and holding down wages.
Last week it unveiled a stimulus plan for the electronics industry. Yet the recession continues to deepen.
China is a net exporter, but demand for its exports fell by a huge 17.5 percent the year to January – the biggest annual decline in over a decade.
Over half of China’s exports are produced with imported components. Several Asian economies rely on China’s manufacturing industries to export components and raw materials to, and as China’s exports fall so too does demand for these components, compounding the global crisis.
China is trying to focus more on production for its domestic market at the same time as trying to support exports. But this strategy is riddled with difficulties.
Both the global market and the domestic market are shrinking. Chinese workers are hardly big spenders – they have one of the highest savings rates in the world.
And no wonder – there is little government help for people in terms of welfare, education, health and pensions. The average stay in hospital costs the equivalent of two years’ wages for the average worker.
Chinese workers are not queuing up to spend what little money they have on consumer products and the growing recession will not encourage them to start.
The way that other countries respond to the slump also impacts on China. The Indonesian government, for example, has passed measures to limit imports form China.
And as the Chinese government invests in infrastructure programmes to try and stimulate the economy, private companies are cutting investment, offsetting any positive impact in terms of jobs.
The crisis is fuelling rows among the global ruling class. The G7 meeting of world leaders in Rome earlier this month seemed to reflect a toning down of global tensions.
World leaders fantasise that China’s economy can save them from disaster and so try to keep China onside. But tensions remain.
The US filed a legal challenge at the World Trade Organisation in December – accusing China of providing illegal subsidies to its exporters.
Meanwhile Chinese officials have implicitly criticised what they see as US protectionism, particularly with the “Buy American” clause in Barack Obama’s recent stimulus package.
And as world leaders squabble about the best way forward, lurching between trying to defend their interests as a global class and their interests as national capitals against other capitalists, global tensions are likely to grow.