Chinese Prime Minister Li Keqiang has suggested that China’s current job market is “complicated and grim” as the country “steadfastly adheres” to a “zero-Covid” policy, whose lockdowns are causing a severe economic contraction across the country. Huh.
According to a survey released by IHS Markit last week, derived from a survey of 430 private industrial companies, the Caixin Purchasing Managers Index, a reliable indicator to gauge the economy, fell to 36.2 in April, from 42 in March. A reading below 50 indicates contraction, while anything above that gauge indicates expansion.
“Demand was under pressure, external demand worsened, supply shrunk, supply chains disrupted, delivery times prolonged, work backlogs increased, workers found it difficult to return to their jobs, inflationary pressures persisted, And market confidence has remained below the long-term average,” said Wang Zhe, senior economist at Caixin Insight Group.
“Retaining market players and securing jobs will win the future,” Li said Saturday during a national video and teleconference on stabilizing employment, according to state-controlled news outlet China Daily.
Li, who holds the number two position in the Chinese Communist Party (CCP), called on all regional government departments to “honestly implement the decisions and arrangements” of the party’s Central Committee and State Council to maintain jobs and economic stability. urged.
Recommending steps for local and provincial governments, he said, “stabilizing employment is vital to people’s livelihoods and vital support to keep the economy running within reasonable limits.”
Li asked enterprises to resume production while adhering to controls designed to prevent the spread of COVID-19.
Lockdowns in more than 20 cities, including Shanghai, have frustrated residents and stifled China’s economic growth. WHO Director-General Tedros Adhanom Ghebreyesus said on Tuesday that China’s zero-tolerance strategy was not sustainable, a comment a day after foreign ministry spokesman Zhao Lijian called “irresponsible”.
Global banks such as UBS, Standard Chartered, DBS, Barclays and Bank of America have slashed their 2022 GDP (Gross Domestic Product) forecast for China.
According to Xinhua, a state-affiliated news outlet, China’s first-quarter GDP for 2022 grew 4.8% year-on-year, higher than expected, but still higher than Beijing’s full-year growth of 5.5%. below target.
Liu Meng-chun, managing director of the Chung-Hua Institution for Economic Research in Taipei, Taiwan, said the slowdown is not only due to China’s COVID policies, but also a crackdown on private enterprise, especially in the technology sector.
He thinks the state is taking a financial stake in some technology giants to gain more control over their operations, but he said the change will be more in style than substance.
“If 1% equity is used to enter its (technology companies) core decision-making circle and become internal supervision, it represents a change in the supervision model,” Liu said.
Ming-Fang Tsai, a professor in the Department of Industrial Economics at Tamkang University in Taipei, said that even if Beijing stops stifling the tech giants, it will be difficult to return to an era of rapid economic growth.
“Alibaba and Tencent are laying off a lot of employees, and now (Beijing) have said it (repression) will stop. It will have no effect on China’s economy,” Tsai told VOA Mandarin.
According to Taipei economist Wu Jialong, tech layoffs fit into a bigger picture as China’s economy has been hit by the “five crises” of jobs, exports, private investment, real estate and loan defaults, pushing its economy to the bottom. has been ,
Lower demand for China’s exports, “will reduce employment, income and consumption power, which will affect real estate,” Wu said. “Moreover, industrial oversight and general prosperity will make things worse, hurting the willingness and capacity of private investment and ultimately creating a crisis of loan default.”
According to Taiwanese economist Liu, if China’s zero-COVID policy lasts longer, industries such as real estate, finance and technology will be hit hard by retail and consumer services. He said the combination would delay the country’s “shared prosperity” campaign launched by President Xi Jinping.
“The control of the pandemic will make the income distribution more unequal. The polarization will become more severe,” Liu told VOA Mandarin.
According to Xie Tian, an associate professor of marketing at South Carolina Aiken University, even if the Chinese economy collapses due to the zero-COVID policy, Chinese officials will be more likely to return to the planned economy of the Mao Zedong era. To adjust the current forces.
“Now the CCP has introduced a number of ‘supply and marketing cooperatives’, ‘integrated buying and integrated selling’, to deal with the economic impact of the city’s lockdown, as it seeks to depress people, And the government controls all goods, sources and channels of goods to achieve its political goals.” Zee told VOA Mandarin.
“Integrated procurement and integrated sales” refers to a policy implemented by China from the 1950s to the 1980s to enforce state control over agricultural resources such as grain and cotton. The Chinese government bought these products in rural areas and gave rations to the townspeople.
In July last year, China launched a pilot program of “supply and marketing cooperatives”. It recounts how the CCP worked as it established a government in 1949 during the post-Civil War period of material deprivation.