China’s private sector struggles as economic growth falters in May, youth unemployment hits new high
- Fixed-asset investment from private business fell by 0.1 per cent in the first five months of the year, while inflows of foreign direct investment dropped by 5.6 per cent
- Industrial output from private firms also grew by only 0.7 per cent last month, while the jobless rate for the 16-24 age group also hit a record high in May
China’s private sector, the biggest source of jobs for its 1.4 billion people, continued to struggle last month despite Beijing’s push for a post-coronavirus economic recovery, partly explaining the record-high youth unemployment and calls for more action to boost investor confidence.
The weakness of both industrial output and investment from the private sector, which employs more than 80 per cent of urban workforce, stood out among the across-the-board slowing of economic activities in May, according to data released by the National Bureau of Statistics (NBS) on Thursday.
Overall fixed-asset investment rose by 4 per cent in the first five months of 2023, year on year, down from a rise of 4.7 per cent in the first four months.
But fixed-asset investment from private business fell by 0.1 per cent, down from the 0.4 per cent rise in the first four months, and in sharp contrast with growth of 8.4 per cent seen by state-owned enterprises from January to May.
Zhao Xijun, a finance professor at Renmin University in Beijing, said the decline directly reflected the level of confidence that the private sector has in China’s economic recovery.