As economic growth tails off, China's unemployment level is rising sharply.
China’s economic growth is tailing off as feared. Although annual growth in 2008 was 9%, fourth-quarter growth slowed to a seven-year low of 6.9% year-on-year, according to preliminary estimates from China’s National Bureau of Statistics. For the year, export and import volumes grew by 17.2% and 18.5% respectively. For the fourth quarter, however, exports grew by only 4.3%, while imports declined by 8.8%.
Officials estimate that the slowing export growth and weakening economic conditions forced companies to lay off around 20 million migrant workers, accounting for more than 15% of the total migrant labor force. The rising unemployment could complicate government plans to boost rural incomes and maintain social stability in the countryside.
Credit is anything but tight in China, though, with banks extending a record high 1.2 trillion renminbi ($175 billion) in new loans in January, according to the China Securities Journal. The government issued lending directives and lowered interest rates several times in recent months to ensure that fundraising channels remained open for Chinese enterprises. January’s surge in lending, however, has prompted some concern among analysts and government officials about loan quality.
China will spend 850 billion renminbi to improve its healthcare system in the next three years, according to a plan released by China’s State Council in January. According to the plan, the government will expand basic medical coverage to include 90% of the urban and rural populations, supervise the production and distribution of many medications and improve services at healthcare institutions at the county level and in rural areas. Rising healthcare costs and limited insurance options have in recent years forced Chinese citizens to save money for potential medical problems. The new plan could eventually free up some of those savings and stimulate consumer spending.
China increased irrigation efforts and employed chemical rain stimulants in February in response to the worst drought in northern China in five decades. The drought has affected 20 million hectares (49.4 million acres) of farmland and caused drinking water shortages for 4.42 million people, China’s ministry of water resources says. The government has promised $12.7 billion in aid for the affected regions.