The post Covid-19 recovery looks bleak in China, which has been marred by the deadly virus since the onset of 2020. According to the latest GDP figures released by China’s National Bureau of Statistics on July 17, the world’s second-largest economy has fallen short of expectations as it grew just 0.8% in the June quarter, down from 2.2% in the first three months of 2023. Second-quarter growth of 6.3% underwhelmed, considering the low base caused by last year’s COVID-19 lockdowns. With its sharpest drop since the height of the pandemic in 2020, the dollar value of Chinese exports also shrank by 12%.
Immediately after the release of government figures, China’s Communist Party rushed to do some damage control. The government issued a joint pledge on July 19, to improve conditions for private businesses in a signal that Beijing will try to bolster corporate confidence as economic growth wanes. According to the joint statement, China vowed to treat private companies the same as state-owned enterprises.
The sinking economy has added to the woes of the growing unemployed youth and the already weak property sector, which accounts for a quarter of output and is a vital driver of industrial and consumer demand. Investment in property development has sunk further by 7.9% in the first half of the year. The official data shows that the housing crisis has worsened as it spreads from small towns to China’s largest cities. According to experts, this is a troubling sign of persisting weakness in an industry that slowed even before the pandemic as the government moved to rein in excessive borrowing.
China’s workforce and consumer base are shrinking while the cohort of retirees is expanding. Unemployment of youth rose to a record 21.3% in June, up from 20.8% the month before, with more than one in five between the ages of 16 and 24 jobless in China. The Chinese Employment sector is also known to follow some grueling practices, like the 9-9-6 culture which requires people to work 12 hours a day, from 9 am to 9 pm. The authorities have always turned a blind eye to such issues and have also received major backlash for it.
According to Forbes, more than a fifth of China’s kids spent 12 hours a day studying for 10-15 years of their life, often on weekends too, only to finish school and not be able to get a job. Some who are getting paid a high amount feel burnt out and have shifted to become ‘full-time children’. China’s notoriously poor work-life balance has pushed these overworked and exhausted young adults to keep their career dreams aside and opt for these unusual choices. Ms. Chen, who has since started her own business, told BBC, “If that went on for a long time, I would indeed have become a parasite.” Speaking to BBC, Jack Zheng, an ex-worker from tech giant Tencent, said he had to respond to nearly 7,000 work-related text messages outside work hours each day, labelling it as “invisible overtime work”.
The unemployment problem in China is more than just Covid-19 and the nationwide lockdowns. China’s recent crackdowns on industries among young Chinese professionals, regulations levied on major tech companies, the banning of foreign investment in private education, and employers’ unwillingness to hire fresh graduates due to lack of experience, have all contributed to the woes of the unemployed.
Reviving a debate on the authenticity of the latest government data, one Chinese Professor has alleged that the joblessness rate in China has already hit 50%. Peking University professor Zhang Dandan wrote in an article published in ‘Caixin’ on July 17, “Employment there only recovered to two-thirds of pre-COVID levels until March, when COVID faded. Young people remain major workers in the manufacturing sector, so they were hit more badly.”
China’s poor economic growth has also prompted economic forecasters like JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. to downgrade their estimates for the year to 5%, putting Beijing’s official GDP target of around 5% at risk. The International Monetary Fund has also jumped to comment on the slow post-Covid economic recovery, as it said on July 19, “A weaker-than-expected recovery and slowdown in China would also have global repercussions beyond China’s major trading partners by affecting commodities for which China accounts for a large share of global demand.”