For Anna Lee, this year has been the worst year she can remember finding a job in China. It was even more difficult than during the pandemic.
“I have been applying for jobs for about six months. added that they are often unable to live.
Five years ago, China’s economy was growing fast enough that many graduates were able to land good jobs. Now, six months after officials began rolling back President Xi Jinping’s draconian zero-corona regime, the pace of the country’s economic recovery has not picked up, and the outlook is so uncertain.
Industrial production and profits, property sales and credit growth all fell short of analyst forecasts in April and early May, eroding confidence in the world’s second-largest economy’s growth prospects, according to recent data. .
The slowdown has already hit the market, with prices of commodities such as copper and iron ore falling, stocks falling and the yuan falling above $7 to the dollar. Consumer spending, which initially surged after the easing of COVID-19 measures at the beginning of the year, has also receded on the bleak economic outlook.
“Confidence is a big issue,” said Hui Xiang, chief China economist at Goldman Sachs. “Consumers are worried about the future and don’t want to spend too much. Private investment is also very weak.
The tremor has adopted a conciliatory tone by Chinese policymakers in hopes of boosting business confidence to restart the country’s economic engine after three years of restrictions due to the pandemic. It happened just a few months later.
It is also cautious after last year’s disappointing performance, which saw economic growth slow to a multi-decade low of just 3% amid sporadic lockdowns, property market collapses and travel restrictions. It also revealed growth forecasts. The year got off to a good start, with gross domestic product (GDP) expanding 4.5% in the three months to March on the strength of exports and retail sales.
But the outlook has weakened in recent weeks, with signs of weakness, especially in the real estate market. Sales in April fell to 63% of 2019 levels, down from 95% in March, according to research firm Gabecal.
Property problems also spilled over into industrial production, which fell in April compared to the seasonally adjusted 2019 figure as demand for cement, glass and other products fell. Household consumption, one of the main drivers of the recovery, has also lost momentum.
The waning momentum has pushed youth unemployment to a record 20.4% last month.
But while youth unemployment has become a symbol of China’s economic crisis, the picture in the broader labor market is more nuanced, economists said.
The key unemployment rate actually fell to 5.2% in April, according to Citi, and employment of migrant workers in Chinese factories rose 3.1% in the first quarter from pre-coronavirus levels.
Some analysts said the broader job market was gaining strength and there remained hope that consumption and property would rebound in the coming months.
“The consumption recovery engine is alive and well,” Gabekal said.
Robin Xin, chief China economist at Morgan Stanley, said the question for Chinese policymakers is whether the recent downturn is a “problem” or whether the government needs to step in with more support. Stated.
Singh said authorities will monitor factory activity over the next two months before making a decision. Stimulus measures could take the form of targeted subsidies for vehicle purchases, relaxed restrictions on property purchases, and funding for infrastructure projects.
China’s 5% full-year growth target for 2023 is still on track, given the low base from last year when authorities shut down China’s biggest city, Shanghai, and other big cities for months, experts said. We expect it to be possible.
Morgan Stanley’s Singh said the government would not allow growth to fall below that level, which risks increasing long-term unemployment and causing social problems. “Social stability is a big constraint,” he says.
Whatever the direction of policy, it looks set to be a dark year for China’s youth. Analysts say shifts in government priorities, including a shift to engineering and electronic hardware manufacturing, away from finance and internet platforms, are already transforming the labor market and throwing many graduates off their feet. It says.
Christina Liu, a student in her 20s from southern Hunan, decided to pursue a PhD after completing her master’s degree but unable to find a job. She is studying in Hong Kong, but many of her friends are having trouble finding or changing jobs for her, she said.
“Some people wanted to quit, but they don’t have the courage to quit unless they already have another job,” Liu said.
Additional reporting by Wang Xueqiao from Shanghai