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Victoria Ruan

China has recorded its slowest quarterly growth in six years, raising concerns about the country’s job stability while adding pressure on Beijing to speed up infrastructure investment and ease policy further.
If the world’s second-largest economy further loses steam, a growing number of companies could have to cut jobs to cope with high financing costs.
Clearly this would be the least preferred option for China’s ruling Communist Party, which is keen to maintain social stability.
The 7 per cent year-on-year growth in the first quarter, disclosed by the National Bureau of Statistics on Wednesday, slowed from 7.3 per cent in the previous quarter.
It just hit the official annual target for this year – widely seen as the leadership’s bottom line to tolerate a slowdown.
Fixed-asset investment climbed 13.5 per cent in the first quarter compared with the year before as property investment growth slumped to 8.5 per cent; industrial output rose 5.6 per cent in March.
All three gauges slumped to their worst level since the global financial crisis. Retail sales growth also decelerated.
At Wednesday’s press conference in Beijing, the bureau’s spokesman Sheng Laiyun attributed the slowdown to “deep corrections” in the world economy, volatility in exchange rates and commodities prices, and “painful” domestic economic restructuring.
A jobless rate based on the bureau’s survey, so far limited to internal reference, has recently stabilised at about 5.1 per cent.
However, Sheng warned that it was a lagging indicator.
“As the efforts deepen on structural adjustment and industrial upgrade, it would be normal for employment pressure in some regions to intensify,” Sheng said. “We must not lose our guard.”
On Sunday, Premier Li Keqiang  urged leaders of China’s northeastern provinces to take action to ensure they met their local growth targets.
The region, known as China’s “rust-belt” industrial base and a major raw material supplier – battered by overcapacity and falling commodities prices – recorded the worst performance in the nation over the past year.
At a meeting with selected economists and executives on Tuesday, Li pledged to step up targeted measures to cope with downward pressure on the economy.
Wang Tao, UBS Securities’ head of China’s economic research, who was invited to attend Li’s meeting, told the South China Morning Post that the government should accelerate infrastructure investment with the help of a more proactive fiscal policy and financing from policy lenders.
“China may also speed up reforms that will help promote growth, such as cutting taxes and lowering market access,” Wang said.
At the meeting, she urged the government to cut policy rates further to ease corporate borrowing costs, which remained 100 basis points higher than the level in the fourth quarter.
She said Li did not directly comment on her rate cut suggestion.
Regulators might need to further ease property control, analysts said.
Andrew Colquhoun, head of Asia-Pacific Sovereigns at Fitch Ratings, said: “It’s sobering that the economy has become so reliant on construction and real estate to generate jobs.
“The ongoing correction in real estate sector poses the biggest single risk to Fitch’s outlook.”
The ratings agency predicted the China’s gross domestic product growth would slow to 6.8 per cent this year, after hitting a 24-year low of 7.4 per cent last year.


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Jobs

China’s slowest quarterly growth in six years raises fears over nation’s job stability

An employee guides a crane as it transports a roll of steel sheet, at a factory in Handan, Hebei province. March factory output rose 5.6 per cent from a year earlier. Photo: Reuters

China's activity indicators for March were all weaker than expected as the GDP grew at a slower pace. Photo: AFP

Downward pressure on China's economy 'increasing', admits Premier Li Keqiang

Chinese Premier Li Keqiang presides over a symposium on current economic situation in Beijing. Photo: Xinhua

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If the world’s second-largest economy further loses steam, a growing number of companies could have to cut jobs to cope with high financing costs


China has recorded its slowest quarterly growth in six years, raising concerns about the country’s job stability while adding pressure on Beijing to speed up infrastructure investment.


.css-sioo19{color:#c79a00;}Update | China’s slowest quarterly growth in six years raises fears over nation’s job stability

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}If the world’s second-largest economy further loses steam, a growing number of companies could have to cut jobs to cope with high financing costs

Update | China’s slowest quarterly growth in six years raises fears over nation’s job stability

If the world’s second-largest economy further loses steam, a growing number of companies could have to cut jobs to cope with high financing costs