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The rate of expansion of China's economy may decline to 4%-5% over the next five years, as new drivers of growth fall short of substituting for the investment-led export boom of recent decades, a senior government advisor told MNI, adding the authorities should be able to meet a key objective by creating more than nine million new jobs per year from 2021-2025.
While China's potential growth rate should be around 5%, actual growth could be up to a percentage point lower, Song Xiaowu, director of the Academic Committee of the China Society of Economic Reform under the National Development and Reform Commission, said in an interview.
"It is difficult to see drivers to propel the economy after so many years of high-speed growth, so it would be normal for the country to enter a stage of low-to-medium-speed growth," said Song, a former official at the State Council and a member of the China Economy 50 Forum.
Such a rate of growth may fall short of expectations, widely shared among other Chinese policy advisors, for the economy to expand by about 5.5% a year during the next five-year plan. Targets for key metrics such as unemployment could be announced during the annual Two Sessions policy meetings starting this week.
POST-COVID JOBS GROWTH
The emergence of both the international and domestic economies from the effects of the Covid-19 pandemic should still allow about 10 million jobs to be created in 2021, a key objective for the authorities for preserving social harmony, although Song cautioned that emergency Covid fiscal measures supporting small businesses should only be withdrawn gradually. This should keep surveyed urban unemployment, a key gauge for the authorities, below 6% after it averaged 5.6% in 2020.
The task of keeping unemployment down should also be simplified by demographic trends, which will reduce the size of the workforce by about seven million a year over the next five years, said Song.
"I am optimistic about this year's employment situation, which is the priority of macro policy," Song said. "But I am worried about the structure of employment, particularly with regards to migrant workers."
China's 290 million migrant workers, mainly from rural areas, do not have equal access to services or residency rights in big cities, despite accounting for 66% of total urban employment in 2019. Putting them on equal footing with city natives would boost per capita consumption by 27%, Song said.
Consumption's role as a key driver for China's economy has been underlined by the government's new "dual circulation" policy, but it has been constrained by slower growth in migrant workers' salaries since 2015, Song said.
Incomes, work conditions and social provision for migrant workers require urgent improvement, he said, particularly as economic activity shifts online. Relaxing the household registration system, which imposes restrictions on the rights of citizens to change their address, is key, he added.