China puts focus on job creation to weather its slowing growth and trade war

Beijing has released a plan to stabilise China’s employment, including relief measures and a promise to create more jobs to help withstand the pressures on the economy.

The plan came after Beijing’s policymakers prioritised social stability at their Central Economic Work Conference two weeks ago and vowed to prevent trade tensions with the United States and domestic headwinds disrupting China’s plan to create a well-off society by 2020.

“[We] will make coordinated efforts and take targeted measures to prevent the risk of mass unemployment,” the State Council, the country’s cabinet, said in a circular on its website on Tuesday.

Employment, seen as a key element of social stability, has received fresh attention as the world’s second-largest economy has slowed, with the third quarter’s GDP of 6.0 per cent being China’s lowest in nearly three decades and with additional US tariffs on US$350 billion worth of Chinese goods set to bite exporters harder.

The circular extended the reduction of corporate contributions to the social security fund for a further year, promised more funding support for small businesses, and promised a greater emphasis on job creation next year.

“[We] will support the development of labour-intensive services like community services, domestic work, tourism, and child and elderly care,” the circular said. “[We] will expand effective investment reasonably and lower the proportion of government funding in some infrastructure projects.”

The government said it would provide subsidies for migrant workers returning home to start businesses, guiding them in areas such as rural e-commerce, logistics and cargo delivery.

China under pressure to maintain ‘stable employment’ environment

According to its official statistics, China created 12.8 million urban jobs in January-November, higher than the full-year target of 12 million. However, such figures do not reflect the whole picture, with a majority of migrant workers excluded from the job figures and the quality of jobs difficult to measure.

The new circular vowed to improve monitoring of this and allow workers who are laid off to register online so that their information and job interests can be shared across the country.

Having pledged that “there will be no families in which all members are unemployed”, Beijing has paid particular attention to three groups: the 288 million migrant workers, the more than 8 million college graduates, and the hundreds of thousands of soldiers who are demobilised each year.

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On Wednesday, the cabinet announced in a separate circular the scrapping of household registration restraints in cities with population of less than 3 million, which will allow rural migrant workers to stay in big cities where there are more job opportunities.

Cai Fang, deputy president of the Chinese Academy of Social Sciences, said the monthly surveyed unemployment rate, published since January 2018, was reliable and could be used for international comparisons.

“China’s natural rate of unemployment, which excludes structural and frictional factors, is about 5 per cent,” the prominent labour economist told the NetEase economists’ annual conference in Beijing on Monday. “If it goes up, a certain degree of countercyclical adjustment will be needed.”

The national surveyed unemployment rate stood at 5.1 per cent in November, 0.3 percentage points higher than a year earlier, according to the National Bureau of Statistics. The rate among those aged 25 to 59 was surveyed at 4.6 per cent.

It is widely believed that the government has set a growth target of about 6.0 per cent next year, with no major stimulus being considered at present.

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