On the heels of a revealing unemployment report by the International Labour Office (ILO), China announced that the ranks of the people without jobs has dramatically increased – setting a 30-year high.

The fresh numbers reinforce our position that investors should look elsewhere in Asia for longer term profit opportunities.

Beijing said that approximately 20 million migrant workers have lost their jobs in China due to the economic downturn. The loss of jobs has prompted 15.3% of workforce in China’s new cities to return home – abandoning the modern urban centers that have come to represent China’s ballyhooed economic miracle.

This new survey was conducted before the Lunar New Year holiday which was celebrated in the last week of January, a holiday during which people returned home. The exodus was caused by a wave of factory closures as exports plunged in the wake of the current global recession.

Beijing admitted that 2009 could be the “toughest year” since the turn of the century for development of the countryside, which has fallen behind as Chinese economic reforms focus on cities.

Despite the gloomy news, the benchmark Shanghai Composite Index gained 9.3% in January 2009 as investors responded favorably to China’s massive economic stimulus package. Still, investors would be wise to consider other regions in Asia for faster gains than mainland China.

Liu Jiwei, an analyst from Pacific Securities, forecast that the growth rate of corporate earnings in China will decline to minus 10% in 2009 from a growth rate of 3% in 2008.”

Overall, 2009 is shaping up as a terrible year for investors with holdings in China.

We recently recommended that investors explore other regions in Asia that have investment potential. The key is to find countries that have cheaper factory labor than China.

We cited South Asia, which includes India, Pakistan and Bangladesh. In addition, parts of Southeast Asia (Cambodia, Laos, Myanmar, Thailand, Vietnam and Malaysia).

The rise of workers rights, coupled with last year’s dramatic inflation, has tarnished China’s reputation as the low-cost provider of manufactured goods. In turn, companies from Asia and industrialized nations are moving to cheaper alternatives such as South and Southeast Asia. In this case, investors would be prudent to follow the money.