Unemployment concerns in China increase as Beijing steps up stimulus

One of the main problems is private enterprise, as opposed to state-owned enterprises. The private sector has contributed to more than 90% of new jobs in 2017 and more than 60% of economic growth, according to an official media report released last year. According to Miller, in the fourth quarter, hiring by private companies recorded the largest slowdown in the previous quarter recorded by the Beige Book.

Private companies have struggled in the past two years as Beijing cracked down on their main financing, the shadow banking system. Huge state banks prefer to lend only to state-owned enterprises, considered more secure borrowers than private enterprises; China lacks a standard system allowing companies to prove that they can repay their loans.

The Chinese authorities then tried to reduce lending rates and encouraged banks to lend to small and medium-sized enterprises.

The government is also increasing vocational training programs in areas where trade tensions have a greater impact, said Meng Wei, spokesman for the National Commission for Reform and Development, at a press conference held at the end of October. She pointed out that trade tensions between the United States and China have created some uncertainty in the labor market and that the government has made employment stability a priority. The commission is the agency of economic planning of the state.

We do not know when and if these initiatives will have a material effect.

The government's latest round of stimulus measures compare to similar efforts around the stock market downturn and the economic slowdown in 2015 and 2016.

"But the situation is probably worse this time, because the service sector employers who had previously absorbed many dismissed workers are now being forced into tighter regulation," Cui Gavekal said in his report. "Government officials are trying to adjust and soften employment policies, but the outlook for household income and consumer spending in China in 2019 is clearly deteriorating."

In an interview with CNBC, however, she added that she did not expect the labor market to deteriorate much from this point, given the latest policy announcements, even though trade tensions remain unclear. an uncertainty. The manufacturing sector also accounts for about 20% of the urban labor market, Cui said, which means that the challenges of the sector do not necessarily reflect the broader labor market.