Jobless Growth In China? Employment Stats Say Recession Has Already Started – Forbes

Employment Stats Say Recession Has Already Started Follow Comments Following Comments Unfollow Comments Li Keqiang, in a speech released last week , said a 7.2% annual increase in Chinas gross domestic product creates 10 million new jobs a year. The premier, therefore, believes each percentage point of growth produces 1.4 million jobs. Morgan Stanleys Ruchir Sharma, writing in the Wall Street Journal just before the release of Lis speech, told us that each percentage point of growth results in 1.6 million to 1.7 million new jobs. Beijings National Bureau of Statistics reported that last year Chinas GDP jumped 7.7%. Applying Sharmas formula, the economy should have created 12.3 to 13.1 million new jobs in 2012. Applying Premier Lis formula, the number is 10.8 million new jobs. So how many jobs were in fact created last year? The Ministry of Human Resources and Social Security reported that 767.04 million working-age Chinesethose aged 15 to 59were employed in 2012, 2.84 million more than in 2011. In other words, the number of jobs increased 0.37% last year at a time when gross domestic product grew, according to NBS, 7.7%. What makes this even more interesting is that Chinas services sector, an obvious job-creator, is expanding fast according to NBS. Services accounted snag a job for 44.6% of GDP last year, up from 41.9% in 2011. Output from services grew 8.1% in 2012, a pace faster than GDP. These figures are hard to reconcile. How can an economy growing in the high single digits with a quickly expanding services sector create so few jobs? There is no iron correlation between GDP growth and employment creation, but the two cannot be this far out of whack in an economy like Chinas that has already passed its initial stage of development. In China, economic growth and employment should more or less move in step. So how fast did China expand last year? Working back from the Human Resources Ministry statistics, the Chinese economy grew 2.0% last year if Premier Lis formula is correct. It grew 1.7% to 1.8% according to Sharmas relationship between growth and jobs. And how fast is China growing now? In 88 cities surveyed by the Human Resources Ministry, the number of available jobstermed demand for workforcein the third quarter of this year fell by 139,000 (2.5%) from the third quarter of 2012. In 95 surveyed cities, the number of available jobs in the July-September period decreased by 232,0004.0%from the second quarter of this year.

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