“I don’t have to worry about losing my job to young graduates and I can have a stable life. There is simply too much pressure working at private firms.”

Employment, or a lack of it, is often viewed as a politically sensitive issue in China as one of the Communist Party’s biggest fears is that rising unemployment would spark social unrest that questions its legitimacy in the absence of democratic elections.

China’s state sector, including state-owned enterprises (SOEs), collective-owned units and other public entities, came to the rescue in the 2008 financial crisis to ensure that employment levels were maintained even as global trade was collapsing.

Xing, like many other civil servants, expects Beijing to sustain employment in the government sector again during the current global economic slowdown amid reports of mass lay-offs in the private sector from manufacturers to internet-based service companies, including ride-hailing and food delivery as well as other technology-related firms.

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Fears of the private sector losing its ability to create jobs to take in both urban residents and rural migrants was especially illustrated when Chinese Premier Li Keqiang elevated a jobs strategy to the top macro economic level for the first time at the annual parliamentary session earlier this month.

In reality, China’s transformation towards a market-oriented economy over the past four decades has led to a dramatic increase in private sector employment, with a downsizing of the share of state firm employment.

In 2017, urban employment in the state sector stood at 60.6 million, only 8 per cent of China’s working force, down from 64.7 million in 2013 and 110.4 million in 1997, according to data from China’s National Bureau of Statistics.

State sector employment has been shrinking in the traditional exports, construction and manufacturing industries because of rising labour costs and amid rising tensions from the US-China trade war. Meanwhile, it is also being displaced particularly in some parts of the services industry by more efficient private firms, including hotels and catering as well the wholesale and retail trade.

To help upgrade China’s economy and generate more consumption, the government is aiming to boost the services sector’s contribution to China’s working population to 55 per cent by 2025 from last year’s 43 per cent, and of gross domestic product (GDP) to 60 per cent from 51.6 per cent.

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“Except for transportation, finance and other government sectors, the remaining service industry is mostly private-dominated,” said Yating Xu, senior economist at IHS Markit. “Given this, the declining contribution of government department employment to the service industry will continue with the expansion of the new services sector and because of government department reforms to cut costs and reduce staff.”

However, worries are mounting among other China watchers about the beginning of a reversal of decades of reforms with a advancing share in the state sector accompanied by a retreating private sector, given the especially harsh liquidity crunch now faced by thousands of private firms despite recent monetary policy easing.

In certain components of the services industry, state firm employment actually rose, with finance up 28 per cent in the four years up to 2017, information transmission and information technology up 21 per cent and health and social services up 17 per cent because of entry restrictions placed on private firms.

But Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, warned of the risks of the public sector expanding to absorb the unemployment from the poorly performing manufacturing sector.

“This will only increase China’s structural fiscal deficit down the road which has already reached 8 per cent in 2018 when including off balance sheet positions,” she said.

US economist Nicholas Lardy, in his book The State Strikes Back: The End of Economic Reform in China?, noted that President Xi Jinping had in recent years called for an expanded role of the Chinese Communist Party, favouring state firms in some strategic areas that are essential to maintaining the position and control of the party.

Policymakers are hoping some state firms grow to become so-called national champions and compete with multinationals based elsewhere in line with the nation’s initiatives to develop a socialist market economy. That means any economic reforms announced to address unequal treatment of the private sector in resource acquisition, obtaining permits, firm operation, government purchases and bidding processes will actually proceed slowly through its implementation process, Lardy said.

“SOEs and private companies are not playing a zero-sum game. Both are indispensable participants in the economy,” said Ding Wenjie, economist at CMB International.

Like his civil servant peers, Xing is being asked to read articles and videos on a new Chinese government propaganda mobile application called Xuexi Qiangguo, which translates as “Study to make China strong”.

“Only socialism can save China, and only opening up and reforms can help China develop, to develop into a socialist state, and to develop Marxist theory,” said the Xuexi Qiangguo app, quoting Xi’s thought on Socialism with Chinese Characteristics for a New Era.

Additional reporting by Sidney Leng