Coronavirus: Chinese incomes tumble for the first time on record in fresh challenge for Beijing

China’s per capita disposable income dropped 3.9 per cent in the first quarter, the first decline since the data series began in 2013
Figures released on Friday also showed the number of rural migrant workers taking jobs at the end of February plummeted by 30 per cent

China economy

Frank Tangin Beijing

Published: 6:15pm, 17 Apr 2020

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Chinese people have suffered the worst start to a year in recent memory as jobs vanished and disposable income shrank for the first time on record because of the coronavirus outbreak, challenging many of Beijing’s goals from poverty alleviation to narrowing the wealth gap.

Per capita disposable income dropped 3.9 per cent to 8,561 yuan (US$1,209) in the first quarter from a year ago, the first fall since the series began in 2013, according to data released by the National Bureau of Statistics on Friday.

China’s rural population suffered the most, with incomes dropping 4.7 per cent to 4,641 yuan (US$656), while urban residents saw their earnings fall by 3.9 per cent to 11,691 yuan (US$1652).

The figures highlight a widening urban-rural divide in the world’s second biggest economy and fly in face of the central government’s goal of narrowing the gap between cities and the countryside.

Friday’s data also showed that the number of rural migrant workers taking jobs outside their hometowns at the end of February plummeted by 30 per cent to 122.5 million, meaning about a third of China’s migrant workers were unemployed. The statistics agency did not provide the March figure.

For migrant workers who managed to return to their jobs, their monthly salary plunged 7.9 per cent to 3,680 yuan (US$520), marking the first decline in their salaries since China started publicising the figure in 2009.

Tumbling incomes will add pressure to China’s goal of lifting all citizens out of absolute poverty in 2020 – a goal that President Xi Jinping has repeatedly vowed to achieve after the outbreak is over.

The data release, which included details of a 6.8 per cent contraction in first quarter growth, painted a jarring picture of economic distress in the world’s most populous country, which has until now seen an economic boom lasting some four decades.

The top priority should be on ensuring people’s livelihoods, which will count on more government subsidies

Raymond Yeung

It also confirmed scores of anecdotal reports of salary cuts and lay-offs among Chinese businesses – for instance in Dongguan, China’s export hub in the Pearl River Delta, where many factories have frozen recruitment and slashed hourly wage rates.

The income data will no doubt add to calls for the government to provide direct relief to Chinese households and individuals, like have been introduced in the United States, Japan, Singapore and Hong Kong.

“The top priority should be on ensuring people’s livelihoods, which will count on more government subsidies,” said Raymond Yeung, chief Greater China economist of ANZ Bank.

Many Chinese have downsized their spending as the coronavirus pandemic stirs up economic uncertainty.

Per capita consumer spending dropped 12.5 per cent year-on-year to 5,082 yuan (US$718) in the first three months. First quarter retail sales were down 19 per cent from a year earlier to 7.86 trillion yuan (US$1.1 trillion), and fell 15.8 per cent in March.

However, China’s official surveyed jobless rate dropped slightly to 5.9 per cent at the end of March from 6.2 per cent at the end of February.

The impact of coronavirus is particularly severe for businesses like hotels and restaurants.

A recent survey of 5,451 restaurants and hotels found that 38.8 per cent have already been forced to cut jobs as their combined revenue in March was only 17 per cent of that a year earlier.

“Many businesses have been restarted, but revenue did not come back. About 70.59 per cent of the surveyed said April and May will be the hardest time,” the China Hospitality Association said.

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