SCIO briefing on China's economy in January and February

The State Council Information Office (SCIO) held a press conference in Beijing on Monday to provide information on China's economic performance in January and February. March 19, 2020

Bloomberg News:

I have two questions. First, what is your forecast for the first-quarter GDP? Do you expect that being negative? Will that continue to the second quarter considering what is happening globally now, in the U.S., in Europe, and elsewhere? My second question is: Do you expect the jobless rate to continue rising? What will the government do to try to bring that down and decrease the unemployment in China? Thank you. 

Mao Shengyong: 

Thank you for your questions. First, regarding the first-quarter GDP, I just released the main economic indicators from January and February. Since statistics for the first two months have already come out, the situation in March will be decisive for quarterly data. After deployment of coordinated epidemic prevention and control measures coupled with economic and social development policies from China's central leadership, resumption of work and production has been speeding up since mid-to-late February. We expect a marked improvement in March. This is our prediction. 

Second, in the first quarter, economic output in March will account for about 40% of the total, with January and February accounted for the rest 60%. March has taken a larger proportion than either January or February in the economic aggregate. We believe that economic performance in March will be significantly better than that of January and February. This is most likely the case in the first quarter. As for the first-quarter GDP, we must wait until the next month to find out. We will know around the same time in the next month. 

As for the next step, our preliminary assessment is: Today, the effectiveness of domestic epidemic prevention and control efforts has become increasingly evident. More importantly, the resumption of work and production is accelerating, and regular production and everyday life are being gradually restored. Domestically, the impact of the epidemic on the economy will decline in the second quarter. By then, some economic activities that have suffered will gradually return to normal. Therefore, the economy in the second quarter is expected to bounce back significantly. In the second half of the year, especially with existing policies and a series of stronger hedging policies which will be introduced, the effects of such measures will become more evident. We believe that China's economy will realize more stable growth in the second half of the year, which will continue as the basic trend for the whole year.

To your second question about the unemployment rate, we did see rising jobless rates in January and February, especially February. The unemployment rate was 5.3% in January and 6.2% in February. We have attributed this mainly to the impact of the epidemic. Production and business activities of enterprises were affected, and demand for labor dropped. As a result, fewer people were employed. How is the jobless rate calculated? The numerator is the unemployed and the denominator is the unemployed plus the employed. If the number of the employed drops, the jobless rate goes up. This is what happened in February. Although the unemployment rate rose in February, we also saw the employment situation of some key groups remained relatively stable. For example, the jobless rate of prime working-age population between 25 and 59 years old was 5.6%, 0.6 percentage points lower than the average. The unemployment rate for people aged 20 to 24 with a junior college degree or above decreased by 0.4 percentage points from January. This is the basic employment situation in the first two months of this year.

Soon, gradual restoration of production and life will increase employment demand and relieve employment pressure. This is our prediction. Due to the resumption of work and production, the employment situation for enterprises is improving, and the demand for labor will continue to increase. A stable approach to gradual recovery of the economy, especially in the second half of the year, will alleviate employment pressure.

In terms of policy, employment is the foundation of public wellbeing and affects every household in this country. The CPC Central Committee and the State Council attach great importance to the employment issue. Employment has been highlighted in policy support of the "Six Stabilities" (which calls for work to stabilize employment, finance, foreign trade, foreign capital, investment and expectations). In terms of macro policy, China has adopted proactive fiscal policy, prudent monetary policy and employment-first policy over the past two years. The country attaches great importance to employment, thus employment policy goes hand-in-hand with fiscal and monetary policies. In general, the employment situation in 2020 has been severe. Overall employment pressure and structural employment problems still exist. However, the central government will continue to increase the hedging effect of macroeconomic policies and strive to help enterprises, especially small and medium-sized enterprises which rely heavily on labor. If we can stabilize enterprises and economic performance, we can stabilize employment. We will strengthen employment-first measures such as improving the training of new employees, transferred employees and migrant workers, making better use of employment funds, and doing more to help and support employment for some key groups like university graduates and migrant workers. Such measures will promote more flexible employment. 

In a word, intensified policies will be introduced to realize overall employment stability this year. Thank you.

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