BEIJING – China's government hopes to generate as many as 13 million new jobs this year to help reverse a painful economic slump but faces “many difficulties and challenges," the country’s No. 2 leader said Friday.
Forecasters say the ruling Communist Party is likely to struggle to meet its official target of 5.5% annual economic growth, its lowest since the 1990s.
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That would be down sharply from last year's 8.1% expansion at a time when China is under self-imposed pressure from a crackdown on debt that Beijing worries is dangerously high, as well as the coronavirus, weak global export demand and high energy costs as oil prices surge during the war in Ukraine.
Premier Li Keqiang promised “pro-job policies” including tax and fee cuts totaling 2.5 trillion yuan ($400 billion) for businesses, especially small entrepreneurs. He said if that works, “we are prepared to step it up.”
China’s workforce is shrinking and has fallen by almost 5% from its 2011 peak.
But efforts to control debt in the vast real estate industry triggered a plunge last year in housing sales and construction, which supports millions of jobs, raising the prospect of a politically dangerous spike in unemployment.
As economic growth slid to 4% over a year earlier in the final quarter of 2021, leaders responded by easing up on longer-term measures to reduce debt and nurture self-sustaining growth based on domestic consumption instead of trade and investment.
“China aims to create 11 million — or preferably 13 million — urban jobs in 2022,” Li said at a nationally televised news conference after the closing of the annual meeting of China’s ceremonial legislature.
He said the total number of job seekers this year is forecast at 16.6 million, including a record 10.6 million university graduates. The government also needs to ensure almost 300 million rural migrant workers in cities have jobs, he said.
The world’s second-largest economy created 12.7 million jobs last year, up from 2021′s 11.9 million, according to government data reported earlier.
Forecasters expect the economy to weaken further before rebounding in mid-year. A recovery is expected to take longer than usual due to Beijing’s desire to avoid relying on its traditional tool of encouraging real estate investment, which might push up debt and housing costs. Efforts to end outbreaks of coronavirus are also slowing a recovery.
The premier expressed confidence official economic targets can be met but warned China also is grappling with debt, global warming and a gulf between its elite and the poor majority.
“The situation we face is still complex and severe, and there are still many difficulties and challenges,” he said.
Li expressed hope for better relations with Washington but announced no concessions in a tariff war over Beijing's technology ambitions.
Trade envoys from the two sides have talked by phone since President Joe Biden took office in January 2021 but haven't announced plans for face-to-face talks.
“We still hope that the two sides will respect each other, peacefully coexist and cooperate for win-win results,” Li said.
China was the first major economy to rebound from the coronavirus pandemic, but annual growth has declined steadily over the past decade. The International Monetary Fund and private sector forecasters expect growth as low as 4.3% this year.
Meanwhile, investors are nervously watching to see if one of China’s biggest developers, Evergrande Group, can avoid defaulting on 2.1 trillion yuan ($310 billion) in debt.
Li said Chinese business leaders he talked with support tax cuts as the quickest way to generate jobs instead of government-led investment or handing out vouchers to households to boost consumer spending.
“We need to rely on market-oriented avenues and means to resolve issues related to employment,” Li said.
Also Friday, Li said he plans to step down next year at the end of his second five-year term as premier.
That is in line with ruling party tradition since the 1990s of leaders handing power to a younger generation once a decade, but President Xi Jinping is expected to defy that by having himself named to a third term as party leader this year.