MNI INTERVIEW: China’s Big Focus Is Creating Millions Of Jobs

China faces a major challenge as a bulge of millions of university graduates and new job seekers make it more essential to spur economic growth over 5% this year through stimulating investment and consumption, a senior policy advisor told MNI in an interview.

China needs to add about 12 million jobs this year, including 10.8 million university graduates, a figure that is up nearly 17% from 2021 and just over 19% from 2020, and which is the biggest challenge for the economy, said Yao Jingyuan, a special researcher at the Counselor’s office of the State Council, which provides advice to the cabinet, see: MNI: PBOC Urged To Seize Dovish Chance Before Fed Hike (Rpt).

“China’s employment situation has an obvious structural issue, some sectors, such as manufacturing, are suffering labour shortages and high labour costs, while some groups, such as graduates, are seeing a high unemployment rate,” said Yao, a former chief economist at the National Bureau of Statistics.

According to the NBS, the surveyed unemployment rate for those 16 to 24 years old was 14.3% in the first 11 months last year, almost three times the surveyed urban unemployment rate of 5%.

Yao explained that fresh graduates prefer working in the services sector, which is still recovering from the pandemic and suggested taking measures to attract well-educated people into the manufacturing sector, which is accelerating digital transformation, and offering potential higher salaries.

“Since private companies, particularly small ones, provide 80% of new jobs, we must make efforts to support them this year by further lowering their borrowing cost and cutting their taxes and fees,” Yao insisted.

STABLE ECONOMY

The economist stressed the top priority this year is “remaining stabilisation” that puts the focus on weak domestic demand to lift GDP.

“Demand is composed of investment and consumption … and investment is the key,” he said, noting the infrastructure investment, which fell 0.17% in the first 11 months last year, was “too low and dragged down the economy.”

He suggested a quicker launch for 102 big projects mapped out in the 14th Five-year Plan (2021-2025) this year and to boost manufacturing investment via tech upgrades, fiscal interest subsidies, and wider equipment depreciation expenses.

Investment stimulus will also help consumption by creating jobs, Yao said, pointing out that the government should remove administrative rules like the quota on license plates needed to own a vehicle, which has curbed urban car purchases. There are just 170 cars per 1,000 people in China compared with eight hundred in the U.S and six hundred in Japan, which means the demand potential, he said.

PROPERTY MARKET

Considering a surge in house price has been curbed and the economy is facing a downturn, the government can relax restrictions on the property market as the real estate sector is quite important to the whole economy with links to over sixty sectors such material producers and home appliance manufacturers, he said.

Yao said plans to start property taxes in more cities need more time to be fully prepared as “new regulatory measures should not be introduced considering the economic situation.”

China will accommodate growth in the rental housing market for the long-term health development of the property sector, but it will continue to regulate trading property as financial products, particularly the “barbaric growth” of capital into the sector, he noted.

PANDEMIC

As to the “Zero Covid” strategy, Yao said it is necessary although it has brought economic and social challenges.

“As a big country with 1.4 billion population and millions of people flowing between cities every day, a strict strategy is needed, or we would suffer bigger losses,” he said. “Indeed, the strategy is costly, but it has proved to be effective.”

Yao suggested the authorities enhance the control since new cases continue to appear in different cities and the Lunar New Year is approaching when travel normally surges, but he did not think the supply chain of China would be impacted.