Manufacturing job losses in China far surpass those in the United States.

China is losing millions of manufacturing jobs due to automation and the adoption of new business systems and production techniques, according to The Conference Board in New York. Between 1995 and 2002, 15 million manufacturing jobs were lost in China, or about 15 percent of the total manufacturing workforce, The Conference Board found after working with China's National Bureau of Statistics. Manufacturing employment in China fell from 98 million in 1995 to 83 million in 2002. By comparison, the United States now has 14.5 million workers in the manufacturing sector, about 3 million less than in 1999.

Most of the manufacturing jobs lost in China were in state-run enterprises. A great deal of the job loss occurred in industries that are labor intensive, and paralleled job losses in similar industries in the United States. For instance, the Chinese textile industry lost 44 percent of its workforce between 1995 and 2002, or 1.8 million workers, while U.S. job losses in that sector were 202,000. Nevertheless, textile output increased 14 percent each year in China between 1995 and 2002, due to the introduction of automation technology.

Between 1995 and 2002, the Chinese steel processing industry lost 557,000 jobs; machinery lost 588,000 jobs; and non-metal mineral products lost 459,000 jobs.

"A lot of Chinese companies are introducing the same technology and methodologies that are being used in the United States so their demand for labor is falling really fast," says Conference Board economist Matthew Spiegelman. "Their former level of productivity was much lower so it's a really rapid improvement." Productivity growth in China was measured at 17 percent per year between 1995 and 2002.

Some Chinese industries are adding workers. Electronics, telecommunications, apparel, finished garments, plastics and the leather industries added employees. Those same industries lost workers in the United States due to outsourcing, says The Conference Board. These industries grew in China because so much of what they produce is irregular and not subject to the same degree of automation as other industries. They employ mostly unskilled laborers.

The Conference Board estimates that China's electronics and telecom industry added 374,000 employees between 1995 and 2002. Garments added 160,000 and leathers and furs added 128,800. "Most of these positions were in firms involving some kind of foreign ownership," according to The Conference Board's analysis entitled "China's Experience with Productivity and Jobs: Benefits and Costs of Change."

Production from state-owned Chinese companies fell from 64 percent of industrial output in 1995 to 30 percent in 2002. Output from firms that have domestic and foreign partners as well as pure foreign enterprises accounted for 34 percent of all output in 2002, up from 15 percent in 1995.

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Foreign and foreign funded firms in China "did show rapid employment growth but, since they started from a small base in 1995, the absolute number of workers added was relatively low--about 2 million between 1995 and 2002."

Like in the United States, jobs in China are shifting into the service sector. But unlike the U.S., 50 percent of China's labor force is still employed in the agricultural sector. What happens to this population of workers is a big question overhanging China's future.

The Conference Board analyzed data from the Chinese National Bureau of Statistics from 51,000 of the largest Chinese manufacturing firms. China's Bureau of Statistics tracks 180,000 industrial firms but data for smaller companies was deemed to be too unreliable.

The Conference Board's analysis was funded by the International Center for East Asian Development based in Japan, an affiliate of the University of Pennsylvania, said Spiegelman. "This research is not funded by anyone with a vested interest in the results," such as companies shifting production to China, he said in response to a question from Manufacturing & Technology News. "We're strictly a nonpartisan group and we wouldn't release anything if it wasn't objective. These are the facts as they stand and it's pretty dramatic when you look at the data and we looked at it in a number of different ways and this is a trend that stands out."