Manufacturing industry in China has experienced a rapid output growth since
the 1990s. In the meantime, the increasing expansion of manufacturing goods
export and Foreign Direct Investment (FDI) inflow has been witnessed during the
same period. Correspondingly, manufacturing employment is expected to grow at
a similar magnitude. The aggregate statistics, however, did not show the similar
growth pattern in terms of manufacturing employment. We call this phenomenon
as "jobless growth puzzle". This paper attempts to explain this puzzle observed in
the manufacturing industry. Economic restructure has caused a sharp decline of
manufacturing employment in the State-Owned Enterprises (SOEs), which triggers
a sluggish job growth at the aggregate level. In fact, the expansion of non-SOEs
manufacturing sector has contributed a high employment growth. Changes in
regional comparative advantage have driven a spatial re-allocation of
manufacturing employment that also attenuates the net growth of manufacturing
employment. A rapid rise in wage rates resulted in a dynamic adjustment of
manufacturing employment in recent years. These changes that determine
aggregate manufacturing employment have important policy implications to the
development of labour market in China.