At the central economic work conference last week, which laid out key economic tasks for 2024, China’s top leadership said development was the biggest political priority, and pledged to exhaust all efforts to consolidate economic growth, including more policies to stabilise the job situation, support the private sector and increase household incomes.
Insufficient demand is one of the major risks hampering economic growth and external markets have been increasingly complicated and uncertain, but favourable conditions still outweigh unfavourable factors in development, the meeting said, urging for confidence.
Challenges, though, which also include high youth unemployment, weak business expectations, a drop in exports, a bleak recovery in the manufacturing sector and rising local government debts, are set to test future growth prospects.
And Peng Peng, executive chairman of the Guangdong Society of Reform, a Guangzhou-based think tank, said many small and medium-sized enterprises may not be able to survive this winter despite some signs of export recovery.
“The authorities should pay attention to the severity of the economic situation,” he said. “It is urgently needed to increase the supportive policies.”
The slowdown has also been felt in other sectors, including electronics and plastics producers, as well as the printing industry.
In August, Simatelex, a Hong Kong-headquartered electronics producer, closed its Shenzhen factory after 38 years, affecting hundreds of workers, according to a report by the Securities Times.
Plastics manufacturers Shenli and Forward, as well as Good Printing, have also closed their Shenzhen factories, hitting thousands of jobs, local media reported earlier this year.
Promotion manager Liang Lu encountered the problem first hand at the start of December after attempting to visit three shoe companies in Dongguan, but finding out they had all suspended production.
The closures also affect nearby shops, restaurants and hotels that rely on workers for their incomes.
“It feels like many communities have become quiet in the city,” Liang said.
The problem, Paris-based investment bank Natixis said at the end of November, is that China has yet to find any emerging industries that are powerful enough to replace real estate as a pillar for the national economy.
And the government should guard against risks of further deterioration of investment conditions and funding difficulties for private business in 2024, according to a report by the Guangzhou Institute of Greater Bay Area.
“If confidence is unable to be revived, private entrepreneurs are likely to continue to lay flat,” said the report by the think tank, which is led by prominent political economist and government adviser Zheng Yongnian.
A protracted weakness in private investment would result in a contraction of demand that may dent hopes for a solid economic recovery, said the report which was released at the end of November.
Xu Qiyuan, vice-director of Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said in an article in October that the urban surveyed unemployment rate is likely to underestimate the current job pressures, with more gauges needed to better reflect the real situation.
“China still has sufficient policy room to grow the economy and realise high-quality growth,” said Xu.
This article was first published on SCMP.
Source: CNA
