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‘Hard to be employed’: jobs, consumption rates still weighing on Chinese economy

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Households in China are still grappling with a weak job market, with consumption spending relatively low as they lean more towards savings, the latest central bank quarterly survey has shown.

The findings of the People’s Bank of China published last week indicate continued challenges for policymakers, who have been counting on domestic consumption to propel the post-Covid economy towards this year’s growth target of around 5 per cent.

Among 20,000 residents across 50 cities interviewed for the survey, 46.5 per cent described the job situation in January to March as “precarious” and “uncertain”, saying they found it “hard to be employed”.

Only 10.5 per cent of respondents said it was “easy to find a job” in the three-month period or that the employment situation was “becoming better”.

A separate PBOC survey of entrepreneurs, also released last Tuesday, showed nearly 42 per cent felt macroeconomic fundamentals such as jobs, and supply and demand were beginning to cool, with many expecting fewer orders.

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Meanwhile, nearly 70 per cent of urban residents surveyed said their income had “remain unchanged”, while more than 17 per cent said this had “decreased”.

Not surprisingly, close to 62 per cent said they “intended to save more”, an increase of 0.7 percentage points from the previous quarter.

Public spending power remained sluggish, the survey showed, with less than a quarter of respondents choosing to “spend more”, remaining unchanged from the October to December period.

Asked to comment on China’s troubled property market, well over half the respondents said that prices were likely to “remain the same” for the next quarter, while 11 per cent forecast an “increasing trend”.

This came as China beat expectations to report 5.3 per cent economic growth in the first quarter, staying on course for the 2024 target despite challenges like a property market downturn and weak domestic demand.

It takes time for the fiscal boost to be transmitted to the economy and help domestic demand to recover

Zhang Zhiwei, Pinpoint Asset Managements

“Property sales of new flats have not stabilised yet. The fiscal policy stance turned more proactive at the National People’s Congress [in March], but bond issuance [by the government to boost the economy] has not picked up yet,” Zhang Zhiwei, president and chief economist at Pinpoint Asset Managements said.

“It takes time for the fiscal boost to be transmitted to the economy and help domestic demand to recover.”

Consumption contributed to nearly three-quarters of January-March growth, compared to around 12 per cent from investment and 14.5 per cent from net exports.

Creating enough jobs for its youth remains a huge challenge for China, as the key private sector struggles to stay afloat with public spending power yet to recover since the coronavirus pandemic.

Nearly 68 billion yuan (US$9.6 billion) of this year’s central fiscal budget will be used to support job creation and entrepreneurship.

“This year we’ll have 11.76 million college graduates entering the labour market,” Sheng Laiyun, deputy head of the National Bureau of Statistics, said last month.

“We need to pay very close attention [to this issue] after figures from the first quarter showed that youth unemployment recorded an increase.”

Official data from March showed that the adjusted jobless rate for the 16 to 24 age group remained at a high 15.3 per cent. The reading for the recently introduced 25 to 29 bracket edged up to 7.2 per cent.

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