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ECONOMY: November China Economy Report
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altChina slows down and downside risk continues
China’s economy slows down for seven quarters in a row and this year’s third quarter’ economic growth stayed at 7.4% - missing the government’s target of 7.5% for the first time in the last three years. 
China’s inflation was close to the slowest pace in two years in September, giving the government room to ease policies should the economy drastically deteriorate further.
Consumer prices rose 1.9% from a year earlier, while the producer-price index dropped by 3.6%, the National Bureau of Statistics said on its website today. China’s imports increased 2.4% from a year earlier, while overseas shipments climbed by 9.9%, the customs administration said on 13 Oct.
"The risks are stacked on the downside," said Jeremy Stevens, China economist at Standard Bank in Beijing, in an interview with Reuters on Wednesday 17 October. "Most macro figures, like industrial production, investment, retail sales and so on, have averaged a lower growth rate in the third quarter than in the second, suggesting additional momentum loss over the quarter.”
altPremier Wen Jiabao took the opposite stance. Xinhua quoted him saying that the economic situation in the third quarter was relatively good and that the government was confident of achieving its 7.5% target. Wen also said that Beijing would not relax restrictions in the housing market which are currently aimed at cooling home prices.
Some analysts cite electricity usage growth which is running at roughly half the average rate of the last five years as a manifest sign of economic malaise. Data on Wednesday 17 October showed that power consumption growth had slipped to an 8-month low contrasting sharply with double-digit growth just a year ago.
But Ting Lu, chief China economist at Bank of America/Merrill Lynch in Hong Kong, believes markets are overly worried about the risk of a hard landing and says that financing conditions have been eased significantly and system-wide credit is growing even more rapidly than official bank lending data suggests.
That's enough to stop economic growth from falling further beyond the third-quarter 7.4% bottom, Lu anticipates, but he cautions that it will not engender a sharp bounce in activity; forecasting full-year growth of just 7.6% for this year and next.
"It might take another couple of quarters for growth to truly bottom out," Lu wrote in a note to clients. "This cycle might be more U-shaped than V-shaped."
Trade and money supply grows but momentum remains uncertain
China’s monthly trade and money supply data released in early October provided a positive outlook for the world’s second largest economy.
"The trade data is a positive sign for the Chinese economy," said Citigroup economist Ding Shuang. "But it remains to be seen whether import and export growth can remain at these levels," he added, noting that unfavourable economic fundamentals in the U.S. and the European Union—China's two big trade partners—raise uncertainties.
China's trade surplus widened in September as exports rose on improved overseas demand and imports recovered slightly, according to data released Saturday. Exports were at a record monthly level of USD 186.4 billion in September, rising a solid 9.9% from a year earlier, data from the General Administration of Customs showed. This was much higher than August's 2.7% rise and well above the median forecast of 5% by 13 economists in a Wall Street Journal survey.
Meanwhile, China's broadest measure of money supply, M2, was up 14.8% at the end of September compared with a year earlier, accelerating from the 13.5% rise at the end of August and beating expectations of economists, data from the People's Bank of China showed Saturday. Analysts said that the September rise, which was above the central bank's target of 14% growth in M2 for the year and the 13.7% median forecast of 15 economists surveyed by The Wall Street Journal, was a sign of a slight loosening of monetary conditions that could help in the drive to boost China's still sluggish economic growth.
Chinese job market still strong
The slowdown in China’s economy isn’t making it any easier for Liu Fenglin to hire 10 experienced welders this year for his heating-equipment maker, according to Bloomberg. 
Liu has managed to find just three employees even with the economy in its deepest slowdown since the global financial crisis. “The scenario when migrant workers will throng around your desk after you hang the job poster is long gone,” said Liu, 46, whose company is in the southern city of Zhuhai. “It’s getting worse year by year.”
Last month, Vice Minister Xin Changxing said the employment situation was generally “stable.” The nation created 9.18 million urban jobs in the first eight months of the year, Xin said, exceeding the full-year target of 9 million.
Chang Jian, a Hong Kong-based economist at Barclays Plc who previously worked at the World Bank, said new entrants to the labour market have fallen from 4 million to 5 million a year from 10 million in the early 2000's. That means “6% to 7% growth is about right for China,” she said.
The number of people aged 15 to 24 is projected to shrink 11.3% to just under 200 million in the five years through to 2015, after expanding 1.3% in 2005-2010 and 13.2% in 2000-2005, according to United Nations data. The group’s share of the population will decline to 14.6% in 2015 from 16.8% in 2010, sliding to 11.4% in 2030, the UN forecasts.
Difficult to follow Chinese employment rate
There’s no reliable way to track changes in China’s employment according to Bloomberg. The broadest figure the government gives is the quarterly urban jobless rate, which excludes migrant workers and has held at 4.1% for eight quarters through June, according to the Labour Ministry.
The highest rate since Bloomberg started compiling the data in 2002 was 4.3 % in 2009.
The Ministry of Human Resources and Social Security conducts a quarterly survey of employment in 100 cities. Its latest report indicated 6.433 million positions were posted in the third quarter, while there were 6.1 million job-seekers. The ratio between positions available and sought was unchanged from the second quarter.
In Shanghai, the easiest work to find was “restaurant waiter and waitress,” with four positions available for every job seeker, the study indicated. Least promising was “vehicle driver,” with four applicants chasing each position.

by Hyuk-tae Kwon
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