China Accelerates Economic Stimulus... Creating 30 Million Jobs and Expanding Loans

The Chinese government is accelerating efforts to stimulate the economy for a growth rate in the 5% range this year. While authorities have launched projects to create a large number of jobs directly, the central bank is laying the groundwork for expanding loans.

On the 24th, the Ministry of Human Resources and Social Security of China announced the launch of the employment promotion project "Spring Breeze Action," aiming to create 30 million jobs from the end of January to early April this year. Yin Donglai, Deputy Director of the Ministry of Human Resources and Social Security, explained, "This plan targets rural workers and companies facing labor shortages," adding, "It focuses on guiding migrant workers to cities and fostering recruitment services that promote local employment and entrepreneurship."

[Image source= Xinhua News Agency]

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Through the "Spring Breeze Action," authorities plan to investigate the labor status in rural communities and accurately grasp the overall labor market demands, including workers' preferences and employers' needs. Targeted recruitment activities will also be conducted both online?via local job websites and video platforms?and offline at local squares, transfer stations, and markets.

The Ministry of Human Resources and Social Security added, "We will activate joint recruitment between labor-intensive areas and regions with labor shortages, encourage entrepreneurship through incubation, and simultaneously provide employment opportunities and technical training for elderly migrant workers."

Li Chang’an, a professor at Beijing Foreign Studies University, emphasized, "Spring Breeze Action is a government-led employment promotion project," noting, "The period from January to April is especially important for worker groups actively seeking jobs around the Lunar New Year." Professor Li stressed, "Such policies can reduce employment information asymmetry and improve the overall efficiency of the labor market."

According to the National Bureau of Statistics of China, 12.44 million jobs were added in urban areas last year, and the urban unemployment rate fell by 0.4 percentage points to 5.2%. Wang Pingping, Director of the Population and Employment Statistics Department at the National Bureau of Statistics, self-assessed, "Due to the normalization of economic activities, economic vitality in major cities has increased, and employment conditions have continuously improved." However, contrary to these official statements, the youth (ages 16?24) unemployment rate in China reached 14.9% at the end of last year. This figure was recalculated excluding students after suspending announcements since June last year when it was 21.3%.

[Image source=Reuters Yonhap News]

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The People's Bank of China (PBOC) has signaled its commitment to economic stimulus by initiating full-scale liquidity supply. On the 24th, the PBOC announced a 0.5 percentage point cut in the bank reserve requirement ratio (RRR), effective from March 5, just before the country’s largest festival, the Spring Festival (Seollal). This is the first RRR cut in four months since last September.

Lowering the RRR reduces the amount banks must hold as reserves, enabling them to provide more loans to businesses and shops, representing a typical monetary easing policy. With persistent price declines and foreign investment outflows, authorities have begun pumping money into the economy. PBOC Governor Pan Gongsheng explained at a press conference, "The RRR cut will inject about 1 trillion yuan (approximately 186 trillion won) of long-term liquidity into the market."

The PBOC also plans to establish a new credit loan department internally. This department is expected to continuously expand credit operations in key sectors and manage financial risks. Regarding the establishment of this department, Governor Pan stated, "We will further enhance the effectiveness of monetary policy that promotes economic structural changes, upgrades, and growth driver transitions," emphasizing, "We will enable financial institutions to increase credit support for core areas and vulnerable sectors." He added, "This year, we will comprehensively utilize various monetary policy tools based on total amounts to maintain reasonable and sufficient liquidity," and stressed, "The scale of social financing and money supply will be aligned with the expected economic growth targets and price levels."

Meanwhile, China is set to announce its economic growth target for this year at the upcoming Two Sessions (National People's Congress and Chinese People's Political Consultative Conference) scheduled for March. Market insiders expect the government to set the target in the 5% range, similar to last year.

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