In Beijing, Bao Zhang started driving for a Chinese ride-hailing service this year after losing his job as a software tester, and says the weak labor market gives him little hope of returning to the IT sector.

His story is becoming increasingly common in China, where millions are moving from official employment to the gig economy due to scant unemployment insurance, a record number of graduates, and a shortage of jobs that is squeezing employment opportunities.

Those who previously used taxis now have to drive them themselves.

– a 30-year-old driver

The Center for Research on New Forms of Employment in China estimates that the number of people employed in flexible forms of employment without permanent full-time contracts will rise to 320 million this year from 280 million in 2025, nearly matching the population of the United States and accounting for about 44% of China’s workforce.

The gig economy serves as China’s social protection

Analysts say the gig economy has become an important buffer for employment as the real estate crisis takes construction jobs and manufacturers cut workers due to automation, costs, and price competition.

The role of gig work is growing among educated youth and white-collar workers, who are held back by weak domestic demand and the adoption of artificial intelligence.

The stakes are extremely high. It is no longer limited to rural migrants and has spread to the middle class and university graduates.

– Yang Zhan, expert in cultural anthropology at Hong Kong Polytechnic University

China is modernizing manufacturing; many industries that used to employ large numbers of workers are now being displaced. Artificial intelligence is also emerging.

– Yang Zhan

The Ministry of Human Resources and Social Security and the State Council Information Office have not yet responded to requests for comment.

As in other countries, gig work softens the hit to income from losing official employment. However in China, the growth of gig work, where contributions to social insurance are not mandatory, intensifies long-term risks for an underfunded social security system.

In 2019, the Chinese Academy of Social Sciences warned that the national pension fund could run out by 2035 due to an aging population. A 2024 update indicates that delaying retirement could push depletion back by 8–9 years.

Perhaps it won’t be easy to find a solution given unstable incomes and contracts in the gig sector. We need to support the formal service sector to create better jobs.

– government adviser

The burden grows

Central transfers filling gaps in the social insurance budget have roughly tripled over the last decade to about 3 trillion yuan, increasing the share of spending in total expenditures to 10%, according to an analysis by Gavekal Dragonomics.

Another government adviser noted that further taxing gig workers, many of whom are rural migrant workers, would be “absolutely unwise.” In the long term, child benefits may be a more acceptable path.

Only two of 12 surveyed gig workers said they voluntarily pay contributions, while two paid through formal part-time work outside gig work. Others prefer to save on their own.

I can control the situation rather than wait decades for others to pay me.

– Angel An

Western insurance practices do not always align with real life. Now Zhang is suffering from ankle and knee pain due to long journeys, but refuses health insurance because pension provisions seem distant and will be small.

– Zhang

Note that gig work does not provide the level of pay and stability that many Chinese expect, warned HSBC Asia economist Frederic Neumann, noting that this could curb consumption and growth.

It is creating an entirely new generation that grows up not accustomed to the security and confidence that parents used to share over a long period.

– Frederic Neumann

Low take-up of social security systems

A government report from December 2025 states that by the end of 2024 only 70.6 million gig workers were insured under the urban pension system for formal workers. Most migrant workers contribute only to the basic scheme, where benefits can be up to 163 yuan per month.

So far there are no estimates of how many gig workers contribute to all social insurance schemes – pensions, health, work-related injury, unemployment, maternity, and housing – but figures are likely lower than expected.

A Beijing University survey of 30,000 delivery couriers showed that fewer than 10% would support mandatory social security contributions, which could cost workers about 10% of their income and employers about a quarter.

“The most urgent priority is to make it easier for flexible workers to be included in the social security system for workers. We must relieve the anxiety so they save less and spend more,” said Ting Lu, Nomura’s chief economist for China.

 

 

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