Tag Archives: unemployment

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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Jobs Not GDP Are The New Measure of China’s Moderately Prosperous Society

Workers polish escalator parts in Zhejiang,China in 2016. Photo credit: ILO. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 IGO License.

THE ABANDONMENT OF a GDP growth target for this year indicates both how uncertain China’s post-pandemic economic prospects look and how job creation and social stability are the Party’s immediate priorities.

Even then, the goal of creating 9 million new urban jobs for this year (and holding the official urban unemployment rate at 6%) could be tough to achieve. It would be the lowest new-jobs target since 2013.

Last year, China added 13.5 million new urban jobs, and that was with GDP growth topping 6%. The Asian Development Bank is forecasting 2.3% growth this year on the assumption that there is a rebound in the second half of the year, an assumption it readily acknowledges that is far from a given. The rebalancing of the economy has not yet reached the point where China is immune to the trends in global trade and the global economy, both of which look to be coronavirus-ravaged for months to come.

More stimulus of the economy is likely to be forthcoming. Prime Minister Li Keqiang’s work report to the National People’s Congress foreshadowed cuts in taxes and fees worth 2.5 trillion yuan ($23.3 billion) for companies and the provision of working capital for viable businesses.

Getting the balance right between reinvigorating the real economy and worsening the country’s debt burden will remain a priority for policymakers. In one sense, eliminating the GDP growth target will help with the debt half of that equation as there will be less pressure on local governments to build the proverbial bridges to nowhere to hit their targets.

Six fronts, six areas

This Bystander expects to hear a lot more frequently about ‘stability on the six fronts and security in the six areas’ — the fronts being employment, the financial sector, foreign trade, foreign investment, domestic investment and expectations, and the areas, job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains and the normal functioning of primary-level governments.

“We must focus on maintaining security in the six areas in order to ensure stability on the six fronts”, Li told the NPC.

It is no coincidence that both lists start with jobs. The goal of a moderately prosperous society by this year was tantalisingly within grasp until the pandemic arrived. Lay-offs, hiring freezes and wage cuts and arrears across China as a consequence of the national lockdown to combat Covid-19 are a potential social fissure that authorities have long feared opening up, and thus threatening the social bargain whereby the Party’s monopoly on power is in return for delivering steadily rising living standards for all.

What counts as a rising standard of living is now being recalibrated. Nevertheless, the Party is clear that its priority is not to let the fissure of employment discontent widen.

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China To Raise Inflation, Lower Money Supply Growth Targets For 2011

The recently concluded annual economic policy meeting set a growth goal of 8% for 2011 with the inflation target raised to 4% from 2010’s 3% and new bank lending to be held at 7.5 trillion yuan ($1.1 billion), according to local press reports quoting authoritative sources. The broad money supply (M2) is set for 16% growth, a slowing from the 19.5% rate it is running at this year, as monetary policy continues to be gently tightened to tackle inflation. All in all, a modest application of the liquidity sponge, and one which suggests a growth rate target of 8% looks unrealistically low.

Other headline goals for 2011 include creating more than 9 million new urban jobs, keeping the official unemployment rate below 4% and extending the incentives for new appliance sales in the countryside emphasizing the tilt towards social goals, income equality and more domestic consumption that are priorities in the new five-year plan that starts next year.

 

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20 Million Migrant Workers Are Jobless

Far more migrant workers have lost their jobs than has previously been stated. Chen Xiwen, a senior agriculture official who is director of the Office of the Central Leading Group on Rural Work, says 15.3% of China’s 130 million migrant workers had returned jobless from cities to the countryside, Xinhua reports. That adds up to 20 million and is about three times as many as has been reported before.

The figures were based on a survey by the agricultural ministry in 150 villages in 15 provinces, carried out ahead of New Year, Chen said. Many migrant workers would have had jobs in low-end export manufacturing, which is bearing the brunt of the economic slowdown. Chen also said that farmer’s net per capita income rose 8% in 2008, but it would likely slow this year, in part because of the influx of returning jobless migrant workers.

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Tuition Refunds For New Graduates Going West

Among a bunch of newly approved measures to boost new-graduate employment — greater freedom to move about the country to look for work; more help to start a business — is an intruiging one: graduates who find jobs in towns and villages in central and western China will have their tuition refunded.

Similar terms will be available to those who join the army. The authorities have previously encouraged new graduates to “Go West”, but this is the first time the government has offered to refund tuition as an inducement, according to Chen Guangjin of  the Chinese Academy of Social Sciences, quoted in the China Daily.

Of China’s 10 million new graduates last year, more than one in eight — 1.5 million people — had failed to find a job by the end of last year. Higher eduction enrollments have risen sharply since 1999 in line with economic development ambitions. The consequence in an economic down turn has been a corresponding upsurge in new-graduate unemployment.

Unemployment has become an overriding concern for the leadership, but this group is a particular worry. The latest measures follow a meeting specifically on the subject chaired by Prime Minister Wen Jiabao. Unemployed new graduates represent not only a potential loss of valuable human capital but also a potential source of  articulate dissatisfaction.

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Economic Planners Look For Growth In 2009

The annual economic conference kicks off today, three days of policy planning at the highest level for 2009, Xinhua reports.

Growth is the top priority, with 8% the baseline. That is the level commonly assumed to be needed to create the jobs necessary to sop up the new entrants to the workforce. Last week, Zhou Tianyong, a researcher at the Central Party School, says that the official unemployment  figure of 4% is artificially low. He contends that the real rate of urban joblessness came in at 12 percent this year and should rise to 14 percent.

The Central Economic Work Conference is also likely to endorse income tax cuts, China Daily reports, raising the threshold of personal income tax from 2,000 yuan a month to 3,000 yuan a month. Along with parallel cuts in business taxes, this would be intended to increase domestic consumption and investment to offset the slowdown in exports.

Zhao Tao, deputy secretary-general of the Policy Research Office of the CPC Central Committee, wrote in commentary published on Saturday in Outlook Weekly, that the goal was to raise domestic demand’s share of GDP to 75%-80% by 2020. It is now 40%. If it were to pull off the transformation, it would be at the same level as the consumption-happy U.S.

The meeting may also provide more detail on the four trillion yuan stimulus package announced last month, or at least on how to finance it.

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Young, Restless & Unemployed

It is not so much the news that rising food and property prices are causing discontent among China’s urban poor as the fact that it is being publicly admitted to. The rare admission comes from the Chinese Academy of Social Sciences, which has been taking the pulse of daily life since the early 1990s, if without the frankness of its newest report.

However, the alarm-triggering stats in the report may not be the ones on double-digit urban inflation buried under the rosier macroeconomic ones (and the flip side of more expensive food in the cities is richer farmers in the countryside; Beijing worries greatly about the growing urban-rural wealth divide and the Academy says rural incomes rose by an estimated 8% last year, the fastest rate in 11 years).

But the Academy also notes that one in five graduates of Chinese universities last year has still to find a job. That would be a million people, a worrying number to economists if it means that a booming economy is failing to generate sufficient graduate-level new jobs, and to politicians , who won’t want well educated young people hanging around cities with time on idle hands.

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