Mounting local govt debts, rising unemployment stall China's income target for 2035: Report
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lthough the Chinese economy has come out of the restrictions, the cash-strapped local governments and unemployed youth have made the chances of achieving President Xi Jinping's grand ambition to double the income of Chinese nationals by 2035 very bleak, Colombo Gazette reported.
According to experts, regulatory crackdowns on education, internet, and property sectors are the major reasons behind the spike in the unemployment rate. The Chinese economy slowed down to 3 per cent, which is considered the second-weakest economic performance in more than four decades.
Other than this, more people than before graduating from university, and young people's reluctance to take on factory jobs with long hours and low pay are also reasons behind rising unemployment.
Then there is a lack of high-tech skills for the fast-changing marketplace; high-tech companies in the field of electronic, electrical, and mechanical require skilled youth, who are in short supply in China, Colombo Gazette reported.
Citing the Ministry of Human Resources and Social Security, it said that nearly 30 million manufacturing jobs in China will go unfilled because of a shortage of skilled workers.
The Chinese economy recently suffered a fresh jolt as industrial production declined in the first four months of 2023. Data from China's National Bureau of Statics (NBS) shows industrial firms recording a 20.6 per cent fall in profits in January-April as compared to last year.
As per NBS, in April alone, industrial firms witnessed an 18.2 per cent decline in profit year-on-year. This decline in industrial profits has come on the back of a report, suggesting that local governments in several Chinese provinces are making painful spending cuts or have to divert money from growth-boosting projects to repay their debts.
Citing Goldman Sachs Group Inc, Colombo Gazette stated that China's total government debt is about 23 trillion dollars -- a figure that includes the hidden borrowing by thousands of financing companies set up by provinces and cities in the East Asian country.
To repay the debt, local governments are making cuts in spending on infrastructure development, salaries of workers, school teachers, street cleaners and others serving under government agencies. In some cases, cash-strapped local governments are also resorting to auctioning off public schools, cutting back on contracts with private firms and slashing medical care and pensions, Colombo Gazette reported.
What makes the situation further serious is that the phenomenon is not limited to one but multiple cities across China.
In Hegang, a Chinese city in Heilongjiang province, public school teachers are worried about possible retrenchment, while low-level municipal workers engaged in street cleaning jobs are without salaries for months.
Central Henan province's Shangqiu City, which is nearly the size of the US's New York City, suspended bus services in March. Hong Kong-based South China Morning Post quoting, Shangqiu municipal government's statement, reported that it has not been able to "pay wages and social security payments for its staff, while not at all able to charge its electric vehicles, nor buy insurance."
Because of this turmoil, the fate of 132 projects in the city worth 167 billion yuan is hanging in the balance. In 2022, Henan province had spent almost 49 billion yuan (7.1 billion USD) on coronavirus controls, accounting for nearly 5 per cent of its budget, it added.
This has also sparked a number of protests across the country. Earlier this year, hundreds of people in Guangzhou hit the streets after the local government in the city decided to cut monthly medical allowances for retirees. A similar scene was seen in Wuhan in Central China's Hebei province where protestors chanted "Dawn with the reactionary government."
Cash-strapped Wuhan municipal authorities have slashed monthly medical subsidies from February onwards by 70 per cent -from 286 renminbi (RMB) or roughly 42 USD to just 83RMB or 12 USD.
Citing Voice of America, the Colombo Gazette stated that even the funeral subsidy has been cut from around 10,250 USD earlier to about 4,400 USD now.
According to the National Bureau of Statistics, as many as 22 out of the 31 provinces in China witnessed a decline in revenues in 2022. Excessive spending on 'Zero-Covid' policies and a crash in the real estate market emptied their coffers. As a result of the downturn in the real estate market, land sales have seen a significant decline, Colombo Gazette reported.
Against this backdrop, whether President Xi Jinping's grand ambition to double the income of Chinese nationals and reduce the gap between the rich and the poor by 2035 will get fulfilled, is a million-dollar question.
✔️ Mounting local govt debts, rising unemployment stall China's income target for 2035: Report
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