China’s economy faces a dual challenge as youth unemployment reaches an alarming record high, while major economic indicators fall short of expectations.
According to the latest data released by China’s National Bureau of Statistics, the unemployment rate among young people aged 16 to 24 soared to a record high of 20.8 percent in May, surpassing the previous peak observed in April. The surge in unemployment indicates that young individuals are encountering significant challenges in finding jobs, as the labour market becomes increasingly competitive.
China’s economic performance has been facing setbacks as major indicators continue to fall short of expectations. Retail sales in May grew by 12.7 percent compared to the previous year, failing to meet the projected 13.6 percent growth predicted by experts. Similarly, industrial production only rose by a modest 3.5 percent year-on-year, slightly below the anticipated 3.6 percent as predicted by analysts. Moreover, fixed asset investment for the first five months of the year registered a growth rate of 4 percent, slower than the 4.4 percent forecasted by Reuters. These underwhelming figures point towards a potential slowdown in China’s economic recovery and raise concerns about the sustainability of growth.
Acknowledging the challenges posed by the uncertain international environment, the National Bureau of Statistics has pushed for more domestic structural adjustments. Despite the current setbacks, there is cautious optimism for the future. Bureau spokesperson Fu Linghui has expressed optimism about China’s economic growth in the second quarter, taking into account the low base of comparison from the previous year. Linghui also anticipates a return to a ‘normal’ growth pace in the third and fourth quarters. The Chinese government aims to achieve its full-year growth target of around 5 percent GDP growth for 2023.
To counter the economic challenges, experts suggest implementing policy stimulus measures to bolster economic recovery. China has already taken steps to loosen monetary policy, including cutting deposit rates and reducing the seven-day reverse repurchase rate. Furthermore, slowing global growth has affected China’s export sector, particularly in the United States and Europe. May’s export data showed a significant decline of 7.5 percent year-on-year, highlighting the impact of external factors on China’s economic performance. However, there was a slight positive note as imports dropped less than anticipated, down by 4.5 percent from the previous year.
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