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.