China’s Slowing Growth Stabilises, But Youth Joblessness Concerns

THE LATEST BATCH of monthly economic data, covering October, the first month of the fourth quarter, suggests the slowdown of China’s economy has stabilised, albeit at a slower pace than in the first half.

The National Bureau of Statistics says that retail sales grew by 4.9% year-on-year last month, up slightly from September’s 4.4% increase. Similarly, industrial output rose slightly, to 3.5% year-on-year from 3.1% the previous month. 

Fixed investment continues to slow, from 12.6% year-on-year for the first six months of 2021 to 6.1% year-on-year for the January-October period, with the property sector crisis still casting a long shadow. Real estate investment fell by 5.4% year-on-year in October. Housing starts were also down, as were home prices.

The problems in the property sector are long-term, and a sharper slowdown in the sector remains a risk. Authorities will be cautious about policy tightening while it is.

However, private investment overall grew by 8.5% year-on-year in January-October, more than twice state investment’s 4.1% pace. That is the mirror image of 2019 and 2020 when state investment sharply outgrew private investment.

More troubling for authorities is that while urban unemployment was down from 5.3% in October 2020, it was unchanged at 4.9% month-on-month, and the rate for 16 to 24-year-olds is nearly three times that. 

Creating sufficient skilled jobs for a well-educated population will be a challenge. Demographics are causing the workforce to shrink. However, the skills and qualifications of those now entering the labour market will be a mismatch for the jobs being done by those ageing out of it.

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