What are China's biggest employment challenges in 2022?

Getting and maintaining a job is important for individuals like us. It affects our lives, families, and happiness. Facing economic challenges, China aims to reduce taxes and refund value-added tax to support economic development and jobs. China will generate 11 million urban jobs to fulfill demand.

Premier Li Keqiang predicted that China's GDP will expand 5.5% in 2022, down from 8.1% last year. Even though economic growth might be down 2.6%, the government hopes to maintain urban unemployment around 5%.

Only 0.4% more than in 2021. Why is this year's job creation harder, according to Premier Li?

Pandemic and unpredictability

First, the epidemic, rising commodity costs, supply chain disruptions, and Russia-Ukraine war generate great concern. Our economy grew 7.9% in the second quarter and 4.0% in the fourth. Total fixed asset investment and retail sales grew by 12.6 and 12.5 percent, respectively.

The tertiary sector, which accounted for 47.7% of employment in 2020, performed poorly. Labor-intensive service industry are susceptible to COVID-19. Almost all occasional outbreaks were tied to vacation, leisure, or cultural and social events and prompted weeks-long company shutdowns. This field's GDP fell from 8.3% to 4.6% in the final half of 2021. This sector's fixed-asset investment growth was 2.1%, the lowest since 2004.

Problems transitioning

Second, the transfer from old to new growth drivers is difficult. The "old economy" is recruiting fewer people and laying off some. "New economy" isn't powerful enough to lead. More college graduates join the labor market, complicating matters. Construction hired around 29 million employees in 2013. By 2020, its employment fell to 21.5 million owing to a cooling property market. Manufacturing employment fell from 52.6 million to 38.1 million.

Financial intermediation, leasing and business services, real estate, software, and IT services have added 8.6 million jobs. Health and education added 5.6 million jobs by 2020. The new economy can't make up for lost employment in conventional fields and can't fulfill the job demand of 10 million undergraduates, graduates, and short-cycle course students. Downsizing in established sectors will cause unemployment in the near future.

The government can do more to protect our jobs. A correlation study reveals the best approaches. Using monthly data of Surveyed Unemployment Rate of 31 Major Cities since January 2018, we can find that the unemployment rate is significantly correlated with Growth Rate of Outstanding Deposit of Financial Institutions, Non-Governmental Investment in Fixed Assets as Percentage of Total Investment, and Growth Rate of Total Retail Sales of Consumer Goods. The unemployment rate may be impacted by the three economic indicators, or vice versa.

The association between Deposit and Unemployment is 0.602, showing that unemployed persons save more money. Analysis demonstrates negative association with latter two (-0.759 and -0.50). Higher private investment and consumption might reduce unemployment. Considering that 63.2% of urban employment was private in 2020 and final consumption's average contribution to GDP growth (59.5% between 2017 and 2019, -22% in 2020), it makes sense to boost private investment and consumption. So plans the government.

Government vows

Premier Li said that "the lion's share of investment in China comes from the non-government sector. We will give full play to the leveraging role of major projects and government investment and refine relevant supporting policies to keep non-government investors fully motivated." Li also said that the government will "steadily increase bulk consumption, continue to encourage sales of new energy vehicles...carry out green smart appliances to the countryside"

The administration also offers tax reductions, advance VAT refunds, social security payment reductions, and training subsidies for micro and small businesses and self-employed persons. State-owned firms are urged to speed up outstanding payments and decrease costs so small market entities may retain operations and employment security.

With so many "silver bullets" coming, most of us can anticipate a monthly income.

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