China stops releasing youth jobs data

BEIJING: China said it would stop publishing data on its rising youth unemployment rate on Tuesday, as it released a raft of disappointing figures that stoked concerns over the state of the world’s second-largest economy.

Shortly before the latest uninspiring indicators were published, the central bank cut a key interest rate in an effort to boost flagging growth.

Tuesday’s data added to a slew of disappointing figures in recent months, reflecting a slump in China’s post-Covid rebound, with joblessness among 16- to 24-year-olds hitting a record 21.3 percent in June.

The country slipped into deflation for the first time in more than two years in July, due to waning consumption and flagging exports.

The National Bureau of Statistics (NBS) on Tuesday said it would no longer release age-group-specific unemployment data starting this month, citing the need to “further improve and optimize labor force survey statistics.”

“Starting from this August, the release of urban unemployment rates for youth and other age groups across the country will be suspended,” bureau spokesman Fu Linghui said at a press conference.

Overall, unemployment rose to 5.3 percent in July compared with 5.2 percent in June, the NBS said.

As indicators of an economic slowdown have piled up, many experts have called for a large-scale recovery plan to boost activity.

But for the time being, authorities are sticking to targeted measures and declarations of support for the private sector with little in the way of tangible steps.

Slowing retail sales

Tuesday’s announcement that youth unemployment data would be suspended came as Beijing released a series of weak economic indicators for July.

Retail sales, a key gauge of consumption, grew 2.5 percent year on year in July, the NBS said, down from 3.1 percent in June and falling short of analyst expectations. Industrial production grew 3.7 percent in July from a year ago, down from 4.4 percent in June.

The suspension of youth jobs data “may further weaken global investors’ confidence in China,” Ting Lu, China economist at Nomura, said in a note.

Chinese social media users on Tuesday were skeptical of officials’ explanation for the move, with the topic receiving over 140 million views and tens of thousands of comments on the Weibo platform.

“Can you solve the problem by gagging and blindfolding yourself?” asked one Beijing-based user in a post liked by more than 3,000 people.

Chinese leaders have sought to boost domestic consumption in recent weeks, with the State Council last month releasing a 20-point plan to encourage citizens to spend more in sectors including vehicles, tourism and home appliances.

The country’s top brass has warned that the economy faces “new difficulties and challenges” as well as “hidden dangers in key areas.”

The recent data suggests China may struggle to achieve a five percent growth target set for the year. The economy grew just 0.8 percent between the first and second quarters of 2023, according to official figures.

Rate cut

In a surprise move, the central bank on Tuesday cut the medium-term lending facility (MLF) rate the interest for one-year loans to financial institutions from 2.65 percent to 2.5 percent.

A lower MLF rate reduces commercial banks’ financing costs, in turn encouraging them to lend more and potentially boosting domestic consumption.

“We believe the Chinese economy is faced with an imminent downward spiral with the worst yet to come, and the rate cut this morning will be of limited help,” Lu of Nomura said.

The Consumer Price Index, the main gauge of inflation, fell 0.3 percent in July, the National Bureau of Statistics said last week.

China slipped into deflation in July for the first time in more than two years, after a short period of deflation at the end of 2020 due largely to a collapse in the price of pork, the most widely consumed meat in the country.

While cheaper goods may appear beneficial for purchasing power, falling prices pose a threat to the broader economy as consumers tend to postpone purchases in the hopes of further reductions.

A lack of demand then forces companies to reduce production, freeze hiring or lay off workers, and agree to new discounts to sell off their stocks dampening profitability.