Global Courant
To counter indications that China’s growing youth unemployment and declining domestic demand may have formed a vicious cycle, the country plans to promote “new consumption,” which refers to a retail model that emphasizes online sales and mobile payments .
The government made the call after a slowdown in Chinese service activity growth in the second quarter of this year. The Caixin China services purchasing managers index (PMI) fell from 57.1 in May to 53.9 in June, the lowest growth rate since January this year, according to a rack published Wednesday.
An official argued that by promoting “new consumption,” which refers to using online and offline shopping and mobile payments to upgrade sales channels, China can create new space for domestic demand and stabilize the labor market.
“In order to form a strong domestic market, it is necessary for our country to firmly implement the strategy of expanding domestic demand,” the official, Zheng Shanjie, chairman of the National Development and Reform Commission, said in a statement. article published Tuesday by the Qiushi Journal. In particular, he said, it is necessary to “comprehensively promote consumption, accelerate the improvement of consumption quality, expand investment space and support the innovation of new products.”
Zheng’s remarks follow a June 29 decision by China’s State Council to a program that is to encourage people to buy furniture and household appliances. Under the program, the government will support private companies’ efforts to develop new innovative home products to upgrade people’s homes and thus support China’s economic recovery.
‘Slow employment’
Many young people who cannot find a fulfilling job and prefer to stay at home or travel rather than take what is available now describe their status as ‘slow job’ rather than jobless. About 18.9% of graduates will choose a “slow job” this year, up from 15.9% last year, according to a surveyj performed by Zhilian Recruitment, a Chinese personnel agency.
On June 15, the National Bureau of Statistics (NBS) said the unemployment rate in China’s urban areas remained unchanged at 5.2% in May from April. 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%.
NBS spokesman Fu Linghui said only about six million young people in China were still looking for work, but he didn’t count the 11.6 million college graduates about to enter the labor market. June is graduation season in China, as it is in many countries around the world.
It is difficult for Chinese graduates to find good jobs. Image: China Daily
a commentary published by the state-owned Economic Daily said society should figure out why young people choose to have “slow work,” which has remained a neutral term so far, but may become another form of “laying flat” in the long run become.
“Lying down” is used in China to describe young people’s rejection of societal pressures to overwork and overachieve.
The op-ed said local governments should hold more job-matching activities for those who don’t want “slow employment” and more learning programs for those who want to enter the advanced manufacturing sector.
It said local governments also need to regulate and improve working conditions in the private sector so that young people want to stop waiting and take jobs.
On June 25, the Ministry of Human Resources and Social Security launched a nationwide program to create new jobs and promote job matching in the country. It said that between July and December, each new graduate will have the opportunity to receive at least one career guidance, three work recommendations, one skills training program and one internship opportunity. It said the government could subsidize private companies to increase the workforce.
Targeted measures
The June PMI growth of 53.9 was lower than the market forecast of 56.2, as consumers scale back their spending on services such as travel and restaurants. Any reading above 50 points indicates month-over-month growth, while any number below that suggests contraction.
“Both supply and demand for services continued to increase in June, but at a slower pace,” said Wang Zhe, senior economist at Caixin Insight Group, in the Caixin and S&P Global statement. “Business activity indicators and total new orders both remained above 50 for a sixth consecutive month, but recorded their lowest readings since January and December, respectively, as the services market saw a weaker-than-expected recovery.”
“A slew of recent economic data suggests that China’s recovery has not yet found a stable footing as prominent issues remain, such as a lack of internal growth engines, weak demand and a declining outlook,” said Wang.
Caixin China’s newly announced PMI matched the official non-manufacturing PMIit fell from 54.4 in May to 53.2 in June.
“It is the non-manufacturing sector, supported by consumer spending, that has helped China’s economy grow in the first half of this year,” said Robert Carnell, regional head of research, Asia-Pacific, ING, in a research report published June 30. “But what these data confirm is that the initial increase contained a lot of pent-up demand.”
“Domestic tourism and dining out have made up for lost time at the beginning of the year. But it will only take so long for this to continue,” he says. “Other retail sales indicators suggest it remains well above historical trends, suggesting further moderation in the second half of this year.”
He adds that while the government has already offered some tax exemptions to businesses during the pandemic, reduced borrowing costs and boosted domestic demand, it must continue to monitor the business environment and take more targeted and effective measures.
Read: Chinese retail sales grow slowly, job markets falter
Follow Jeff Pao on Twitter at @jeffpao3
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