Just before the release of the latest indicators, which came out as weak as expected, the Chinese central bank cut interest rates in an effort to boost economic growth..
The new indicators add to a series of statistical figures in the past months, which showed the suffering of China’s economy to recover from the pandemic era. Unemployment among youth between the ages of 16 and 24 reached a record 21.3 percent in June..
And the National Bureau of Statistics announced, on Tuesday, that it had stopped publishing unemployment indicators for age groups, citing the need to “improve the labor force survey statistics.”“.
“As of this August, the publication of urban unemployment rates for youth and other age groups across the country will be suspended,” bureau spokesman Fu Linghui said at a press conference.“.
The bureau reported that the total unemployment rate rose from 5.2 percent in June to 5.3 percent in July.
Growing unemployment among young people is beginning to worry many of them. Student Li Niujun told AFP in Beijing that these unemployment rates are “very worrying“.
The 18-year-old added, “Whenever I think about finding a job, I get very anxious“.
Retail sales slowdown
With growing numbers pointing to a possible slowdown in the economy, many experts have called for a broad recovery plan to boost the economic cycle..
“With the aim of quickly reviving demand, we believe the most effective policy option at this junction would be to launch a government-backed central stimulus consumption plan,” analysts at Societe Generale Wai Yau and Michel Lam said in a note.“.
However, the authorities have so far maintained targeted measures and declarations of support for the private sector, in light of the limited concrete measures taken by Beijing..
Tuesday’s announcement on stopping the issuance of youth unemployment rates coincided with the publication of a series of weak economic indicators by the Chinese authorities in July.
Retail sales, the main indicator of household consumption, witnessed an annual growth of 2.5 percent in July, according to the Statistics Office, down from the 3.1 percent it achieved in June..
In addition, industrial production achieved an annual growth rate of 3.7 percent in July, down from the 4.4 percent achieved in the previous month..
Ting Lu, China economics analyst at Nomura, warned that suspending the publication of youth unemployment rates “may further weaken international investors’ confidence in China.”“.
Many users of local communication sites met the official justification for the move with a mixture of skepticism and sarcasm.
A user from Beijing wrote, “Can you solve the problem with a gag and a blindfold?“.
Chinese leaders have sought to stimulate domestic consumption over the past weeks.
Last month, the State Council issued a 20-item plan to encourage residents to increase spending in several economic sectors such as cars, tourism and household appliances..
At a meeting in late July chaired by Xi Jinping, the Communist Party’s Politburo warned that the country’s economy “is facing new difficulties and challenges.”“.
China has set a target for its GDP growth for this year at 5 percent. Although this percentage is among the lowest in the country in decades, Prime Minister Li Qiang admitted that achieving it will be difficult.
Indicators reinforce this difficulty, as China’s economy grew by only 0.8 percent between the first and second quarters of 2023..
cut interest
In an unexpected move, the Chinese central bank on Tuesday cut the interest rate on medium-term lending facilities, which are one-year loans to financial institutions, from 2.65 percent to 2.5 percent..
Reducing this interest reduces the cost of financing for banks, which encourages them to increase lending and thus the possibility of enhancing spending..
Ting suggested that “the Chinese economy is facing an imminent downward spiral and the worst is yet to come, and the assistance from the rate cut will be limited.”“.
In July, China recorded a contraction in prices for the first time in more than two years, under the weight of slowing domestic consumption.
Although falling prices appear in principle to be beneficial to purchasing power, in reality it poses a threat to the economy as a whole, as it forces consumers to postpone their purchases instead of spending, in the hope of benefiting from an additional decline in prices..
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