China's jobs data offer glimpse into crystal ball

BEIJING - Many economists outside China don't seem to have given sufficient attention to China's employment statistics, which are key to understanding its economic policymaking and resilience.

Foreign media and economists have recently paid particular attention to the purchasing managers' indices to see whether the different sectors of the economy have been expanding. Any indication that the PMI for even a single sector of the economy has fallen tends to be read as a sign of the overall Chinese economy facing a slowdown pressure.

However, such assessment missed the full picture. The Chinese economy has so far remained resilient despite many risks. The overall growth rate has not fallen outside the target range, which has been set at 6.5 percent to 7 percent this year.

The jobs data are an equally, if not more important tool to look into the crystal ball. Top economic policymakers have attached the greatest importance to the labor market, saying that jobs underpin social stability, wealth, consumption and thus economic resiliency.

"The employment issue cannot be overestimated," Chinese Premier Li Keqiang said recently. "The ultimate aim of our efforts to maintain stable economic growth is to make sure people have jobs."

China's growth has slowed down over these years from the past extremely fast growth and policymakers have said that it may well be a prolonged "L" shape, but this does not mean that economists should be pessimistic about the economic growth. China's current growth rate, in line with the target range, is still one of the fastest.

More importantly, employment remains stable despite slower economic growth, underpinning economic resilience. China added 13.12 million urban jobs last year, better than expected, and the registered urban jobless rate was still fairly low at 4.05 percent at yearend.

China expects a record 7.65 million college graduates to enter the labor market. Together with vocational school trainees, the total number of new job seekers exceeds 12 million.

It is a challenge but not an insurmountable one. Statistics show China added 3.18 million urban jobs in the first quarter this year, and the jobless rate remained low at 4.04 percent. There were 107 vacancies for every 100 job seekers, indicating a slight tight labor market.

The still slightly tight labor market, said Li Zhong, spokesman for the Ministry of Human Resources and Social Security, is attributable to stable economic growth, continual progress in reform and innovation, and policies supportive of entrepreneurship and employment creation. The not so challenging employment situation is also partly due to a demographic change, as the number of children per family has been on decline.

The labor market change is also reflective of China's economic transition from a model driven by exports and investment to one led by domestic consumption and services. The services sector is believed to be more efficient in creating better-paid jobs for China's increasingly well-educated labor force.

China is benefiting much from the stable labor market. China now has the capacity to accommodate slower economic growth than in the past.

It is favorable for implementing reforms aimed at reducing redundant capacity in sectors such as steel and coal, which will help improve the efficiency and potential of the Chinese economy in the long run.