President Xi Jinping's Most Sensitive Issue... 'Employment'

Lockdowns in Major Cities Including Shanghai Push Urban Unemployment to Highest Since March 2020
Chinese Leadership Likely to Miss GDP, Unemployment, and Fiscal Deficit Targets

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's unemployment rate has surged, far exceeding the Chinese leadership's management target of 'around 5.5%' for this year. The unemployment rate appears to have risen sharply due to repeated lockdowns in major urban centers caused by the resurgence of COVID-19.

[Image source=Yonhap News]

Employment is the starting point of Xi Jinping's governance philosophy of 'common prosperity (a society where everyone lives well together)'. Employment insecurity can lead to public discontent. From the perspective of President Xi, who is preparing for his third term at the 20th Party Congress, employment is the most sensitive issue.

According to Chinese media including the Communist Party's official newspaper People's Daily on the 17th, the Ministry of Human Resources and Social Security of China will conduct a 'special online campaign to create 10 million jobs' until August 25.

The special campaign involves 10 associations such as the Textile Industry Federation, Non-ferrous Metals Industry Association, Insurance Industry Association, and Automobile Industry Association, providing customized recruitment services by industry and region.

The Ministry of Human Resources and Social Security's job plan was announced immediately after the National Bureau of Statistics released key economic indicators such as retail sales in April. Amid an 11.1% year-on-year plunge in retail sales in April due to the 'COVID lockdown' impact, another notable indicator is the unemployment rate.

In April, the urban unemployment rate in China was 6.1%, up 0.3 percentage points from the previous month. This is the highest level since March 2020, the early stage of the COVID-19 pandemic. It is 0.6 percentage points higher than the Chinese leadership's unemployment target of 5.5% for this year.

The unemployment rate in major cities across 31 provinces, municipalities, and autonomous regions reached 6.7% in April. This means the perceived unemployment rate is much more severe than the official rate announced by the statistics bureau. In fact, the unemployment rate for those under 24 years old was as high as 18.2%, and the unemployment rate for migrant workers (low-wage workers who moved from rural areas to cities) was recorded at 6.6%.

Employment insecurity is also reflected in the number of newly created jobs this year. As of the end of April, only 4.06 million new jobs were created this year. The Chinese leadership's target for new jobs this year is 'more than 11 million'.

Photo by Xinhua News Agency Capture

Even college graduates, considered highly skilled labor, are a concern. This year, the number of expected college graduates is 10.67 million. This is the first time the number of expected college graduates has exceeded 10 million.

The state-run Global Times reported that due to the COVID-19 pandemic, employment pressure on young people including expected college graduates will intensify this year, and major local governments will prioritize employment for college graduates.

Professor Chao Baowin of the Central University of Finance and Economics said, "To secure employment, securing market entities (companies) is a priority," and expressed concern that "market entities will face issues such as securing operating funds including labor costs." This is interpreted as a call for government financial policy support such as hiring subsidies.

Some in Beijing predict that due to the resurgence of COVID-19, three major economic indicators?Gross Domestic Product (around 5.5%), unemployment rate (around 5.5%), and fiscal deficit ratio (2.8%)?may fall short of the leadership's targets.

Liao Qun, chief researcher at the Chongyang Financial Research Institute of Renmin University of China, said, "While the key indicators to be announced next month for May are expected to improve compared to April, it remains to be seen whether May's indicators will be better than those of March," and expressed concern that "achieving 4.8% GDP growth in the second half of the year could be a tough battle."

The Global Times, citing experts, reported that as downward pressure on the economy increases, government fiscal input is inevitable, and it cannot be ruled out that the fiscal deficit ratio, initially set at 2.8% earlier this year, may be raised to above 3%.

This content was produced with the assistance of AI translation services.