Daily US Times: Economists often say that China’s economic data can not always be trusted. But China said on Friday that it wouldn’t be setting a target for economic growth for this year.
Economists now have a new dilemma – there is no data.
It is unprecedented for China as it hasn’t done this since it began publishing such goals in 1990.
Not setting any growth target is an acknowledgment of just how difficult recovery in China will be in post coronavirus pandemic time.
And while recent figures have shown that China is on the way out of its slowdown: it’s an uneven recovery.
The good news for China is that for the first time since the pandemic hit China – factories are making goods again.
In April, industrial output brew by a better-than-expected 3.9%. This is still a marked difference from the collapse of 13.5% in the first two months of this year as massive coronavirus lockdowns were imposed.
There’s also a swathe of other data that has been surprisingly strong – pointing to what economists like to call a V-shaped recovery – a sharp, drastic initial fall – followed by a quick rebound in economic activity.
According to investment bank JP Morgan, coal consumption by six major power generators surged back to historical norms after May’s “Golden week” holidays. It currently stands 1.5% above the historical average, suggesting that power demand has returned to normal.
As economic activity has picked up in China, the pollution-free Chinese skies that we saw in the aftermath of the lockdowns there, they’ve disappeared.
The country’s air pollution levels recently surpassed concentrations over the same period last year for the first time since the coronavirus pandemic began, driven by industrial emissions.
All of this shows that China’s economic growth is slowly coming back to business.
But it is not business what we were used to before the pandemic. This shows how difficult it will be for the rest of the world to get our economies going again.
Recent retail sales data show just how difficult it is going to be to get people into shops and buying things.
In April, sales were down 7.5%- better than March, but nowhere near where they need to be for the economy to be running on full force. Many Chinese people are still worried about a second wave of infection, and they are not spending as much money as they used to.
It is no wonder China abandoned it’s growth target this year. Chinese government knows it will be hard to forecast just how deep the crisis has become.
Compounding all of that – are the all-important unemployment figures – which officially came in slightly higher in April than in March, at 6%, edging closer to historical highs, while most economists say the real number is much worse.
Even the Global Times, China’s hard-line Communist mouthpiece and typically the Chinese economy’s biggest cheerleader – has pointed out how dire the employment picture is.
The paper said that this year “it will be nearly impossible for Chinese employees in the private sector to earn as much salary as they did in 2019,” as small businesses have had to fire employees or cut staff.
It’s going to get worse before it gets better.
Prof Justin Yifu Lin of Peking University predicts some 85% of private enterprises will struggle to survive over the next three months.
“Bankruptcy of enterprises will lead to an increase in unemployment,” he adds.
If it is granted that many Chinese people are employed by state-owned enterprises, and China’s economic system is able to absorb the ranks of the unemployed better than the US.
Chinese people have better family support and more savings, and many migrant workers also have land back home that they can rely on for basic needs and even sustenance in the very worst of circumstances.
Wang Huiyao of the Centre for China and Globalisation said: “You will see a great transition of migrant workers going back to their villages where they have their own piece of land.”