[The Epoch Times, January 21, 2022]China’s economy reported growth momentum last year, but there are signs that factors such as weak consumption and the housing crisis have deepened the negative impact on China’s job market, the world’s second-largest economy in 2022. This year will face the pressure of a sluggish job market and the economic outlook will be tested.
According to the China (CCP) Bureau of Statistics, China’s economy grew by 4% year-on-year in the fourth quarter of last year, a further slowdown from the 4.9% growth rate in the third quarter. For all of last year, China’s economic output rose 8.1 percent from a year earlier, the government said. But most of the growth occurred in the first half of last year.
“We doubt this reflects reality, our China activity index suggests last quarter’s output Basically stagnating. With the real estate sector still struggling and virus disruptions becoming more frequent, economic momentum is likely to remain subdued for much of the year.”
Economists pointed out that weak economic growth momentum in China will further affect the job market. As the pursuit of zero-tolerance Covid-19 policies continues to weigh on consumption and regulation hits the real estate and technology sectors, the labor market will come under more pressure and challenges to economic growth are likely to grow.
China’s official data showed that 12.69 million new urban jobs were created in the whole of last year, a year-on-year increase of 830,000, lower than the same period in 2019 before the outbreak, and the national urban unemployment rate was 5.1%. The analysis believes that the official unemployment rate does not fully capture all negative economic changes.
Consumption drags down employment
Continued sluggish consumer spending in China is a major drag on the job market. The service sector employs nearly half of China’s workforce, but consumers have underperformed in spending on services such as dining and travel as China’s Covid-19 zero policy mandates lockdowns of outbreak areas at any time.
Weak consumption data clouded the economic outlook. China’s official statistics showed that retail sales fell short of expectations in December, rising just 1.7% from a year earlier, the slowest pace since August 2020.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics think tank, told VOA: “The biggest headwind is China’s own zero Covid-19 policy. It cannot avoid Omicron by locking down. spread”.
Economists at Japan’s Nomura Securities pointed out in a report earlier this month that the high infectivity of the Omicron mutant strain means that the cost of China’s zero new crown strategy is rising, while the benefits are falling.
“Business has yet to return to pre-pandemic levels, and industry workers may drain their savings and consume less,” they wrote.
The official Chinese report acknowledges that the country’s service sector job market has not recovered to pre-pandemic levels and faces the daunting task of stabilizing employment this year.
The “Social Blue Book: Analysis and Forecast of China’s Social Situation in 2022,” released by the Chinese Academy of Social Sciences in December, pointed out that the service sector, the main source of employment, faces pressure to stabilize employment growth as the pandemic has delayed retail, catering, and catering services. And the recovery of the hotel.
The Real Estate Crisis and Migrant Workers
The crisis in China’s real estate industry has hit construction workers. Official Chinese data showed that the construction industry registered negative growth in the fourth quarter of last year, affecting job opportunities for construction workers.
Last year, Chinese policymakers focused on curbing real estate debt risks, asking developers to reduce leverage. After the debt crisis of the real estate giant Evergrande, more real estate developers chose to reduce new real estate investment and development in order to reduce the debt ratio.
Real estate investment fell 13.9 percent in December from a year earlier, the fastest pace of decline since early 2020, according to Reuters calculations based on official Chinese data, while investment in 2021 rose 4.4 percent, the slowest since 2016.
In China, many construction workers are migrant workers, and these migrant workers who have left cities because of unemployment are not included in China’s urban unemployment survey data.
Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis, told VOA: “It’s true that the official unemployment figures are not rising fast, but the elephant in the room is migrant workers. That’s where most of the problem lies because they’re very focused on infrastructure and property construction, which is also an area where we’ve seen fixed asset investment and activity plummet.”
China’s migrant workers account for nearly one-fifth of the total population and are the cornerstone of China’s basic manufacturing industry. The number of migrant workers peaked in 2019 and recorded negative growth for the first time in 2020. The number of migrant workers rose 2.4 percent year-on-year last year, official data showed.
Lu Feng, a professor at the National School of Development of Peking University, believes that the rebound in the increase in migrant workers has not compensated for the increase in the number of migrant workers that should have been increased in the past two years. He predicts that there is still a gap of more than 6 million in the number of migrant workers currently working in cities compared with before the epidemic in 2019.
“The relative reduction of several million migrant workers in two years may have an impact on income of 100 billion yuan,” Lu Feng said at an economic observation report held at Peking University in December.
Tech industry layoffs
Last year, Chinese officials clamped down on a group of tech giants on the grounds of preventing the disorderly expansion of capital, sparking a new wave of layoffs that have long affected their hiring prospects.
At the end of last year, China’s top video platform iQIYI was exposed to large-scale layoffs, which may involve up to 40% of iQIYI’s employees. The company has about 8,000 employees.
Didi Chuxing, the Chinese ride-hailing giant that was delisted from U.S. stocks last year under a Chinese official cybersecurity investigation, has laid off thousands of employees since July, according to The New York Times, citing people familiar with the matter. Jieting has also cut 1,000 employees in China since August.
The Chinese government also introduced tough new rules for after-school tutoring last year, hitting companies in the education sector hard. One of China’s largest after-school tutoring companies, TAL, reached 110,000 at its peak and is now laying off 90,000. Another giant, New Oriental, said it plans to lay off more than 40,000.
Technology companies have long been one of the most sought-after industries for Chinese graduates. A crackdown by Chinese officials on the most promising companies could seriously affect the employment prospects of college graduates.
Unemployment among urban youth aged 16 to 24 reached 14.3 percent last year, higher than a year earlier, official Chinese data show.
The already miserable job market may also usher in more intense competition. Officials from China’s Ministry of Education estimate that the number of Chinese college graduates will reach 10.76 million this year, an increase of 1.67 million from last year and a record high in terms of scale and growth.
A record number of young people are preparing for postgraduate studies due to a weak labor market. Data from the Ministry of Education shows that 4.57 million people applied for postgraduate entrance exams this year, an increase of 800,000 over last year. It is worth noting that this group of people will not be counted as job seekers into the unemployment rate, which means that the actual employment pressure of students will be greater.
from the Voice of America
Responsible editor: Liu Yi
