Youth Unemployment Rate Improves in China, Hits Lowest Point in December

The Chinese economy achieved a growth rate of 5.2% on an annual basis in the last quarter of the past year, which was below analysts’ expectations. However, the country simultaneously witnessed a significant improvement in the youth unemployment rate in December.

According to the statement issued by the National Statistics Authority on Wednesday, the unemployment rate for the age group of 16 to 24 years old reached 14.9 percent last month, as reported by “China Daily”. This rate does not include students and is compared to the percentage of 21.3 percent that was achieved in June before the authority suspended the issuance of such data.

The data also showed a decrease in the urban unemployment rate included in the survey to 5.2% in 2023, down 0.4 percentage points from 2022.

However, despite these good numbers, China recorded its lowest growth in 30 years in 2023 outside the “COVID-19” phase, at a time when the real estate crisis and the uncertainty hinder the recovery of the world’s second largest economy.

The giant Asian country, whose economy suffered greatly from strict restrictions imposed to combat the “COVID-19” pandemic for three years, lifted these measures at the end of 2022, allowing the economy to restart at the beginning of last year.

However, this recovery has lost its momentum and is facing several obstacles, including a decline in the confidence of households and businesses, negatively affecting consumption. In addition, there is an unprecedented crisis in the real estate sector and a record unemployment rate among young people, as well as a global slowdown, which hinders the traditional drivers of Chinese growth.

Despite this, the total Gross Domestic Product (GDP) registered a growth rate of 5.2 percent throughout the year 2023, as announced by the National Statistics Office. However, this rate, although higher than the majority of major economies, is the lowest recorded in China since 1990, excluding the “COVID-19” period.

A group of economic experts surveyed by the French Press Agency gave their opinions, expecting the growth rate that was confirmed by the Chinese Prime Minister, Li Qiang, at the Davos Economic Forum in Switzerland on Monday. On the other hand, the growth rate between the third and fourth quarters, which is considered the best indicator of the current situation, was much weaker, recording 1%.

The analyst Shahzad Qadi from the consulting company “China Big Book” stated: “China witnessed an unprecedented recovery last year, which was disappointing. It emphasized the need for support for economic activity in 2024.” Kan Yi, an official from the National Bureau of Statistics, confirmed to journalists that “promoting economic development was a challenging task” in 2023.

In December, retail sales, which are a key indicator of household consumption, slowed down to record a 7.4% annual growth rate, following a noticeable acceleration in November at 10.1%. Analysts surveyed by Bloomberg had anticipated a faster pace at 8%.

As for industrial production, it experienced a slow acceleration in December to 6.9 percent on an annual basis, following a previous increase of 6.6 percent in the previous month.

The real estate sector has been suffering since 2020 due to Beijing tightening the conditions for real estate contracting companies to obtain credit in order to reduce their debt levels. The financial difficulties of giant groups such as “Evergrand” and “Country Garden” are fueled by a decline in buyers’ confidence due to unfinished homes and a significant drop in prices.

Official supportive measures have had limited impact so far. In December last year, major Chinese cities recorded a new decline in housing prices on a monthly basis, according to the National Bureau of Statistics. This included 62 out of the 70 cities listed in the official index in this field, compared to 33 in January 2023, indicating a deterioration in the situation.

Analysts from Goldman Sachs have pointed out that there has been a significant decline, especially in small and medium-sized cities.

Buying real estate has always been a safe investment for Chinese people, so a significant decrease in prices greatly affects their financial situation. Michelle Lam, an economic expert at Societe Generale Bank, told the French Press Agency that “providing greater support for real estate companies would alleviate concerns” about their financial situation and revitalize this vital sector.

The World Bank’s predictions indicate that the Chinese economy will slow down in 2024, reaching 4.5 percent. It is expected that the government will announce the official target in this regard in March next year.