China's Economy Grows 5%, but Job Market Concerns Persist

While China's economy shows a 5% growth, challenges remain due to the lingering effects of the real estate crisis. Concerns about future job opportunities and cautious domestic spending continue to dampen confidence despite the positive economic indicators.

China unveiled a range of economic data this morning, revealing that its economy grew by a steady 5% last year, meeting the government’s target.

Other figures showed a 3.5% increase in total retail sales of consumer goods compared to 2023, signaling some recovery in domestic consumption.

However, challenges persist. The fallout from the real estate crisis continues to weigh on the economy, and concerns about job prospects have led to cautious consumer spending.

The southern megacity of Chongqing, home to 32 million people, offers a snapshot of the nation’s economic mood. With Chinese New Year approaching, the government is attempting to stimulate demand, expanding subsidies to encourage the replacement of old appliances, like rice cookers and televisions, with newer models.

Last year, China also announced a significant $1.4 trillion (£1.15 trillion) economic stimulus package aimed at reducing local government debt over five years.

In his New Year’s Eve address, President Xi Jinping struck a mixed tone. “China’s economy has rebounded and is on an upward trajectory,” he said, while acknowledging public concerns. “The worries of the people about jobs and incomes, elderly and childcare, education, and medical services are always on my mind. This year, basic pensions have been raised, and mortgage rates have dropped.”

Despite these efforts, youth unemployment remains a critical issue, with nearly one in five young people unable to find work. Economic analyst Xu Tianchen of the Economic Intelligence Unit remarked, “The government is quite worried because if unemployment continues to grow, it could lead to social instability, which is something the government cannot tolerate.”

In 2023, President Xi urged young people to endure hardship, calling it “eating bitterness.” Now, the government appears to be softening its stance, exploring new measures to create jobs and boost consumption as it seeks to stabilize the economy and restore public confidence.