Explainer | C919, durian and record-high youth unemployment: 9 things you might have missed from China’s economy in May
- Unemployment among China’s youth rose above 20 per cent for the first time in April, data released in May confirmed, while exports grew at a slower pace
- Trade ministers from China and Australia also met, while Hainan is readying for its first durian harvest this year and the C919 completed its first commercial flight
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May further underlined the difficulties facing China’s economic recovery, with data on record-high youth unemployment and sluggish retail sales, slowing exports and foreign direct investment, and falling inflation being released for April.
There was, though, some good news as the C919 – China’s first domestically developed narrow-body passenger jet – completed its first commercial flight, while the trade ministers from China and Australia met in Beijing.
1. C919 takes flight
Bearing the symbolic number MU9191, the flight operated by China Eastern Airlines and carrying more than 130 passengers left Shanghai’s Hongqiao International Airport at around 10.30am – about 10 minutes ahead of schedule.
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China’s C919 passenger jet completes maiden commercial flight from Shanghai to Beijing
The flight was welcomed with a water salute as it landed at Beijing Capital International Airport at 12.30pm, according to a live feed from state broadcaster CCTV.
The two-hour commercial flight comes after 14 years of development, and as China is seeking to reduce its dependence on foreign technologies amid a bitter rivalry with the US-led West.
2. Youth unemployment hits record high
“The unemployment rate for the young labour force rose above 20 per cent, which is a worrying sign,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
What is China’s youth unemployment rate and why does it cover ages 16 to 24?
China’s youth unemployment rate mainly covers recent graduates from high schools or vocational schools, who are aged between 15-18, and college students, who often graduate at the age of around 22.
It is a key indicator for Beijing to gauge social stability and economic growth.
3. Australia, China ties continue to thaw after Beijing trade talks
The two sides did not reach any agreements during the talks, but Wang has accepted an invitation to visit Australia.
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Australian trade minister visits China, 'hopeful' for trade resolution
4. Don’t read too much into big headline retail sales figure
Retail sales in April also fell by 7.8 per cent from March, the official data showed.
5 takeaways from China’s April economic data as youth unemployment worsened
5. China’s new financial regulator opens its doors
The body was set up as part of a sweeping reform plan unveiled at the annual “two sessions” parliamentary meetings in March amid Beijing’s shift to prioritise financial stability.
Li said the new regulator would strive to oversee all types of financial activities and would seek to eliminate regulatory “blind spots” and “build up an iron wall of financial security”.
6. Slowing exports sign of things to come
China’s exports grew at a slower pace in April despite a low coronavirus-induced comparison base last year, with the slowdown of imports further accelerating, adding to uncertainties over the post-Covid-19 economic recovery.
Imports, meanwhile, fell short of expectations and shrank by 7.9 per cent in April from a year earlier to US$205.21 billion, down further from a fall of 1.4 per cent in March, amid weak demand and lower commodity prices.
7. Hainan set to durian harvest
Chinese growers began cultivating some 206,000 hectares (510,000 acres) of tropical fruits in Hainan province in the 1950s. Cultivation of durian, which promises to be the island’s main cash crop, took off in 2020 thanks to technology that sped up the growth cycle.
China to eat first local durians in June. Is Malaysian, Thai dominance at risk?
8. Inflation data highlights domestic demand concerns, economic uncertainty
CPI hit its lowest rate in more than two years in April, while PPI fell at the fastest rate since May 2020.
Analysts said China was likely to face a period of moderate inflation, with both CPI and PPI expected to be low in the second quarter before rising in the second half of the year.
9. Sluggish foreign direct investment despite charm offensive
China’s foreign direct investment is falling as overseas businesspeople fret
The actual use of foreign investment measures the amount of money that China has already received when carrying out a contract with foreign companies.
And a couple of other things you may have missed …
China kept its benchmark lending rates unchanged for the ninth straight month in May, with the one-year loan prime rate (LPR) steady at 3.65 per cent and its five-year LPR unchanged at 4.30 per cent.
Nomura cut its forecast for China’s 2023 gross domestic product (GDP) growth to 5.5 per cent from 5.9 per cent, while JPMorgan lowered its full-year GDP growth estimate to 5.9 per cent from 6.4 per cent.
And finally, profits at China’s industrial firms fell by 20.6 per cent in the first four months of 2023 from a year earlier, official data showed.
