TIANJIN, China—Chinese Premier Wen Jiabao offered reassurance about
China's economy at a big international gathering, saying the country is
on track for its target of 7.5% growth this year.
His comments, at the World Economic Forum in Tianjin, came after a raft of weak data and as a Manpower survey suggested the slowdown is beginning to take a toll on the job market.
Mr. Wen, who is set to retire following a leadership transition this fall, also defended his record as premier since 2003, and was particularly forceful in defending China's hefty stimulus campaign during the global financial crisis in 2008 and 2009, which he said helped prevent job losses.
Acknowledging that the Chinese economy is under "notable downward pressure," Mr. Wen said the government has introduced several measures since May to support growth, including interest-rate cuts, reductions in the required reserves for banks and tax reforms.
He also hinted that Beijing may unleash massive fiscal spending to support the economy, saying China has a budget surplus so far this year of around 1 trillion yuan ($158 billion), and around 100 billion yuan in a special reserve fund, "which we will not hesitate to use for the fine tuning of the economy."
Meanwhile, a survey of more than 4,000 Chinese businesses by staffing company Manpower Group points to weaker employment growth at China's manufacturers.
Most of the businesses in the survey, released Tuesday, said they plan to maintain or increase their workforce in the final quarter of the year. But the number saying they plan to reduce headcount or are undecided crept up. Hiring intentions were particularly weak in the manufacturing and construction sectors, and in the export-heavy city of Shenzhen.
Manpower Chief Executive Jeff Joerres said the slowdown in hiring merited close attention, though not panic. "If we see more firms reducing their headcount, that could be a problem," he said.
China's economic growth has slipped to its slowest rate since 2009. But the labor market has proved mostly resilient, with few of the factory closures and mass layoffs that marked the previous slowdown. Analysts say that relatively robust labor markets so far this year are one reason the government has not done more to support growth.
The downturn in hiring reflects a slowdown in both exports and construction, two main pillars of China's economy. August exports were up just 2.7% from a year earlier, and exports from labor-intensive manufacturing hubs Zhejiang and Jiangsu provinces are falling. The area of new residential property area under construction in the first eight months of 2012 was down from a year earlier, denting demand for construction workers.
China's recent Purchasing Managers' Index surveys of employment also point to weaker labor markets, with some manufacturing businesses starting to let workers go. The official PMI survey employment index came in at 49.1 in August; a number below 50 indicates net firing, while above 50 indicates net hiring. Income-tax receipts are also down, likely reflecting a combination of a change to the tax rates and weaker employment.
Vice Minister of Human Resources and Social Security Xin Changxing sounded a note of caution on employment in remarks quoted in the People's Daily newspaper on Tuesday, saying the impact of the economic slowdown can be seen in a deceleration in new job creation starting in April.
Official data on China's labor markets is published infrequently and is widely regarded as unreliable.
Even as manufacturing slows, there are signs that China's service sector is taking up some of the slack. The Manpower survey shows a strong increase in hiring intentions in the services sector. The nonmanufacturing PMI also shows service-sector businesses still hiring.
In other indications government efforts to rekindle growth are beginning to have an impact, new loan data show signs of a recovery in credit demand. New loans rose to 703.9 billion yuan ($110.9 billion) in August from 540.1 billion yuan in July.
Many analysts give China great credit for its package of stimulus policies a few years ago, which arrested a sharp slowdown. But the stimulus plan also had many long-term costs, including inflation, soaring property prices that threatened to form a bubble, and a build-up of questionable loans at state banks.
At the World Economic Forum, Mr. Wen defended the policies.
"Some people made accusations about China's plan...and even said that we paid an undue price," Mr. Wen said Tuesday. "It was exactly due to our resolve and scientific response that China was able to prevent factory closures and job losses."
The stimulus was initially billed by the central government as being worth 4 trillion yuan, but was in fact significantly larger as local governments spent liberally on infrastructure projects and banks went on an unprecedented lending binge.
Mr. Wen, who is expected to be succeeded by Vice Premier Li Keqiang, touted progress made under his watch on various fronts. China has introduced measures to narrow its massive income gap, ameliorate regional disparities in development, improve environmental regulation, and lay out a basic system of social benefits, he said.
"We maintained social stability and prevented a disruption to the process of modernization," he said.
His comments, at the World Economic Forum in Tianjin, came after a raft of weak data and as a Manpower survey suggested the slowdown is beginning to take a toll on the job market.
Mr. Wen, who is set to retire following a leadership transition this fall, also defended his record as premier since 2003, and was particularly forceful in defending China's hefty stimulus campaign during the global financial crisis in 2008 and 2009, which he said helped prevent job losses.
Acknowledging that the Chinese economy is under "notable downward pressure," Mr. Wen said the government has introduced several measures since May to support growth, including interest-rate cuts, reductions in the required reserves for banks and tax reforms.
He also hinted that Beijing may unleash massive fiscal spending to support the economy, saying China has a budget surplus so far this year of around 1 trillion yuan ($158 billion), and around 100 billion yuan in a special reserve fund, "which we will not hesitate to use for the fine tuning of the economy."
Meanwhile, a survey of more than 4,000 Chinese businesses by staffing company Manpower Group points to weaker employment growth at China's manufacturers.
Most of the businesses in the survey, released Tuesday, said they plan to maintain or increase their workforce in the final quarter of the year. But the number saying they plan to reduce headcount or are undecided crept up. Hiring intentions were particularly weak in the manufacturing and construction sectors, and in the export-heavy city of Shenzhen.
Manpower Chief Executive Jeff Joerres said the slowdown in hiring merited close attention, though not panic. "If we see more firms reducing their headcount, that could be a problem," he said.
China's economic growth has slipped to its slowest rate since 2009. But the labor market has proved mostly resilient, with few of the factory closures and mass layoffs that marked the previous slowdown. Analysts say that relatively robust labor markets so far this year are one reason the government has not done more to support growth.
The downturn in hiring reflects a slowdown in both exports and construction, two main pillars of China's economy. August exports were up just 2.7% from a year earlier, and exports from labor-intensive manufacturing hubs Zhejiang and Jiangsu provinces are falling. The area of new residential property area under construction in the first eight months of 2012 was down from a year earlier, denting demand for construction workers.
China's recent Purchasing Managers' Index surveys of employment also point to weaker labor markets, with some manufacturing businesses starting to let workers go. The official PMI survey employment index came in at 49.1 in August; a number below 50 indicates net firing, while above 50 indicates net hiring. Income-tax receipts are also down, likely reflecting a combination of a change to the tax rates and weaker employment.
Vice Minister of Human Resources and Social Security Xin Changxing sounded a note of caution on employment in remarks quoted in the People's Daily newspaper on Tuesday, saying the impact of the economic slowdown can be seen in a deceleration in new job creation starting in April.
Official data on China's labor markets is published infrequently and is widely regarded as unreliable.
Even as manufacturing slows, there are signs that China's service sector is taking up some of the slack. The Manpower survey shows a strong increase in hiring intentions in the services sector. The nonmanufacturing PMI also shows service-sector businesses still hiring.
In other indications government efforts to rekindle growth are beginning to have an impact, new loan data show signs of a recovery in credit demand. New loans rose to 703.9 billion yuan ($110.9 billion) in August from 540.1 billion yuan in July.
Many analysts give China great credit for its package of stimulus policies a few years ago, which arrested a sharp slowdown. But the stimulus plan also had many long-term costs, including inflation, soaring property prices that threatened to form a bubble, and a build-up of questionable loans at state banks.
At the World Economic Forum, Mr. Wen defended the policies.
"Some people made accusations about China's plan...and even said that we paid an undue price," Mr. Wen said Tuesday. "It was exactly due to our resolve and scientific response that China was able to prevent factory closures and job losses."
The stimulus was initially billed by the central government as being worth 4 trillion yuan, but was in fact significantly larger as local governments spent liberally on infrastructure projects and banks went on an unprecedented lending binge.
Mr. Wen, who is expected to be succeeded by Vice Premier Li Keqiang, touted progress made under his watch on various fronts. China has introduced measures to narrow its massive income gap, ameliorate regional disparities in development, improve environmental regulation, and lay out a basic system of social benefits, he said.
"We maintained social stability and prevented a disruption to the process of modernization," he said.
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