For Anna Li, this year was the worst she could remember looking for a job in China – even harder than during the pandemic.
“I have been looking for a job for six months. I’m very tired, but I haven’t received an offer yet,” said the 25-year-old graduate from the wealthy eastern province of Shandong, adding that even if she got a job, the salary for office work was often unaffordable.
Five years ago, Chinese economy grew fast enough that many graduates could find good jobs. Now, their prospects are less clear as the country’s economic recovery is not gaining momentum six months after the authorities began rolling back President Xi Jinping’s tough coronavirus regime.
Industrial production and profits, property sales and credit growth everything has failed The latest data showed that analysts’ forecasts in April and early May undermined confidence in the growth prospects of the world’s second largest economy.
The slowdown has already hit markets as prices for commodities such as copper and iron ore drops, stocks fell and the yuan weakened to more than seven dollars per dollar. Consumer spending, which initially jumped after Covid-19 controls were eased earlier in the year, also eased on a bleak economic outlook.
“Trust is a big issue,” said Hui Shan, chief China economist at Goldman Sachs. “Consumers have concerns about the future – you really don’t want to spend. Private investment is also very weak. You talk to entrepreneurs, but there is still a reluctance to engage.”
The aftershocks come just months after Chinese politicians adopted a conciliatory tone in hopes of strengthening business confidence restart the country’s economic engine after three years of pandemic restrictions that have stifled activity.
They also released a cautious growth outlook after last year’s disappointing results when the economy grew just 3 percent, its lowest performance in decades, as it suffered from sporadic lockdowns, a collapse in the property market and travel restrictions. This year started with stronger trackwhile gross domestic product increased 4.5 percent in the three months to March, driven by strong growth in exports and retail sales.
But the outlook has worsened in recent weeks, with the real estate market showing signs of volatility in particular. In April, sales fell to 63 percent of 2019 levels, compared with 95 percent in March, according to market research firm Gavekal.
Real estate problems weighed on industrial production, which fell in April from seasonally adjusted figures for 2019 as demand for cement, glass and other commodities fell. Household consumption, one of main intended recovery driversalso lost ground.
Weakening momentum increased youth unemploymentwhich hit a record 20.4 percent last month.
But while youth unemployment has come to epitomize China’s economic woes, the overall job market picture is more subtle, economists say.
The overall unemployment rate actually fell to 5.2% in April, with employment among migrant workers who work in Chinese factories up 3.1% from pre-pandemic levels in the first quarter, according to Citi data.
With the broader strengthening of the labor market, there was still hope that consumption and real estate would get back on their feet in the coming months, some analysts said.
“The engine of the recovery in consumption is intact: a tightening labor market will eventually boost incomes and lead to more household consumption in the coming quarters,” Gavekal said.
For Chinese policymakers, the question is whether the recent lethargy is a “hitch” or whether the government will need to step in with more support, said Robin Xing, chief China economist at Morgan Stanley.
Xing said officials would wait to monitor the plant’s activities for the next two months before making a decision. Stimulus measures can take the form of targeted subsidies for the purchase of vehicles, easing restrictions on the purchase of real estate, and financing of infrastructure projects.
Beijing full year 5 percent growth target 2023 should still be achievable given the low base from last year, when authorities closed Shanghai, China’s largest city, and other metropolitan areas for months on end, experts predict.
Morgan Stanley’s Sin said the government will not allow growth to fall below that level, which would drive up long-term unemployment and risk causing social problems. “Social stability is a hard constraint,” he said.
Whatever the political direction, this is a bleak year for China’s youth. Changes in government priorities such as transition to engineering and electronic equipment Analysts say manufacturing and moving away from financial and internet platforms has already reshaped the job market and left many graduates stranded.
Christina Liu, a 20-year-old student from the southern province of Hunan, decided to get her PhD after she couldn’t find a job after completing her master’s degree. She studies in Hong Kong but said many of her friends are either trying to find work or changing jobs.
“Some of them wanted to retire, but they really don’t dare to do so until another job comes along,” Liu said.
Additional Report of Wang Xueqiao in Shanghai