Global Courant
China’s post-Covid economic recovery is slower than expected at a time when many consumers are reportedly facing wage cuts and rising costs for child rearing and elder care.
The year-on-year growth rate of total consumer goods retail sales fell from 18.4% in April to 12.7% in May, the National Bureau of Statistics (NBS) said Thursday.
In the first five months of this year, China’s total retail sales of consumer goods grew 9.3% to 18.76 trillion yuan ($2.63 trillion) from a year ago. However, the increase was mainly due to a low base as many Chinese cities went into lockdown in March-May last year. The growth rate of the figure was actually 7.6% from 2021 to 2023, compared to 8% from 2019 to 2021.
While the official statistics updates don’t highlight the problem, the internet is abuzz with claims that workers are already suffering or will soon face massive pay cuts.
Commentators see wage cuts trend
A columnist from Henan, nicknamed Wu, published a article with the caption: “An era of payroll deductions may soon be upon us. Keep your jobs. Money is king.”
Wu says in the article that many people are not willing to spend money because their wages are being reduced or they are at risk of being fired.
“As the youth unemployment rate continues to grow, many job seekers may be asking for lower wages,” he says. “Most people who are already working will face a pay cut this year.”
He says people tend to save more money these days because it is likely that China’s inflation will continue to grow for the rest of this year.
A columnist from Lanjinger.com, a financial news website, writes in a article published on Thursday that many employees of investment banks and brokers have recently been told they will receive reduced salaries and bonuses this year.
A Hunan-based writer say many medical staff have faced pay cuts this year as hospitals receive fewer patients but incur higher operating costs. A Chinese vlogger say some IT workers are also facing pay cuts of 30-50%.
Official statistics do not include sectoral breakdowns by pay and do not quantify the situations of pay cuts described by netizens.
According to the NBS, disposable income per capita in urban areas rose 4% to 14,388 yuan in nominal terms in the first quarter of 2023 from a year ago, or an increase of 2.7% in real terms. Rural disposable income rose 6.1% to 6,131 yuan, or a 4.8% increase in real terms.
Media reports said last year that civil servants and teachers could not receive their year-end bonuses. But still, the NS said China’s disposable income per capita rose 5% year-on-year to 36,883 yuan in 2022 in nominal terms, or an increase of 2.9% in real terms.
A Chinese writer notes that people’s disposable income is under pressure due to rising expenditure on education and care for the elderly. Citing research published by YuWa Population Research, he says a family has to spend about 627,000 yuan to raise a child in China, a very large sum. In addition, he says, with China’s aging population, there is one elderly person for every pair of other adults (2.3 people to be exact) to support financially.
An elderly Chinese man in an archive photo. Image: Agencies
How accurate are the employment figures?
In its report on Thursday, the NBS said the unemployment rate in urban areas remained unchanged from April at 5.2% in May. The unemployment rate of people aged 16 to 24 was 20.8% last month, while that of people aged 25 to 59 was 4.1%.
Some commentators said the numbers are severely biased because people are not considered “unemployed” if they work at least one hour a week, return to the countryside or depend on financial support from parents.
She said some unemployed graduates have to pretend they have assured prospects to get their degrees: their schools require graduates to provide proof that they have been offered employment before school certificates are issued; some graduates ask friends and relatives to make “offerings” that they can show to fulfill the requirement.
The NSB insisted the official unemployment figures accurately reflect the situation in the labor market.
“We have been continuously improving and perfecting our country’s labor force survey system since its inception,” NBS spokesman Fu Linghui said in a press briefing on Thursday. “The unemployment rates are scientific and standardized, in line with international standards, and can objectively reflect our country’s urban employment situation.”
Fu said anyone who works at least one hour a week, or who temporarily leaves a job due to vacation or suspension, is classified as “employed.” He said it is international practice to exclude from the labor force survey anyone who has no intention of working.
He said there are 96 million people between the ages of 16 and 24 in the country, but only 33 million of them have entered the labor market while the rest are still studying. He said only about six million of these young people are still looking for work.
“The unemployment rate surveyed in the cities will not underestimate the country’s unemployment situation,” he said. From a historical perspective, the figure objectively reflected changes in urban employment. For example, due to the epidemic at the beginning of 2020, the urban workload had increased at that time.”
It is rare that the NBS feels the need to elaborate on its survey methodology during its monthly media briefing.
consumption patterns
Last December, the Chinese government announced that it would end all of its Covid rules from January this year.
A supermarket in Shenzhen. Archive photo
In order not to be confused by the low base in January-May 2022 during the city lockdowns, January-May figures can be put in 2023 And 2021 to see the impact of the cancellation of the Covid rules on retail sales.
According to the NBS, hospitality revenue rose to 2 trillion yuan in the first five months of this year, 22.6% more than a year earlier, but only 12.2% more than the same period of 2021.
In the first five months of this year, jewelry sales were 13.2% above 2021 levels. Cosmetics sales were up 4.2%, while telecommunications equipment sales were up 2.4%. Sales of clothing, shoes, hats and textiles increased by 1.4%.
Sales of cars continued to fall by 2.8%, while sales of electrical appliances and audio and video equipment fell by 5.9%. Furniture sales fell 15.4%, while building materials sales fell 18.4%.
In January, the China Banking and Insurance Regulatory Commission said at a meeting that supporting China’s economic recovery and boosting domestic consumption are the top priorities of all tasks in 2023. Banks are expected to lend more to consumers and cut rates to encourage people to spend more .
Read: More US companies looking elsewhere: AmCham China
Follow Jeff Pao on Twitter at @jeffpao3
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