Thursday, May 30, 2013

(Business) China: Tapering off?

China have long been tipped to overtake the United States as world’s largest economy and premier superpower however of late China has experienced a notable slowdown underlined by the unexpected growth shown by the Philippines as the nation beat into second achieving 7.8 per cent growth to china’s 7.7 in the first quarter[1]

This compounds a less than fantastic week for the country as yesterday the IMF reduced it forecast for china’s pointing to the slowdown in exports[2]. While this may appear to represent not much in the way of decline, a trend is clearly developing as while China is at a solid  7.7 percent, it was 7.8 just a year ago which was “its slowest rate for 13 years”[3].

While China’s current slowdown owes largely to the current state of the global economy, China has experienced a slump in its manufacturing, which has been at the heart of China growth over the last three decades as “factory activity had contracted for the first time in seven months”[4].

However while its economy has experienced a slight decline, its growth is still strong in comparison counterparts in the west however China, if not careful, could end up making the mistake many nations, especially in the west, have made in failing to deal a job market  that at once cannot match its demand and favours experience over youth.

China has not escaped the global macro trend of the world becoming no place for young men and women looking to succeed and support themselves as it job market has slowed. Reuters’ Didi Tang chronicles the struggle of chemistry graduate Jiang Wenying who may have consider other options having “sent out more than 1,000 job applications, netting no more than 10 interviews and not a single job offer”[5]. This can only be bad news for China down the road as Jiang is one of the nearly seven million graduates who “are leaving universities and graduate schools to seek their first job” only to find that it may not exist[6].

This trend can have real political implications as it has in numerous countries who have paid no attention to creating a job market that’s friendly to the young as many of the graduates are the sons and daughters of China growing urban middle class which have started to find its voice.

In sum, China may end up becoming the world’s biggest economy as its rate of growth has been one of the highest in the world for two decades straight but as faces a number of problems owing to the state of the global economy and number of problems with labour policy and job market which could have political as well as economic implications, it may have to wait a little bit longer.  

[1] K.Lema, 2013, Philippines’ surprisingly strong first-quarter growth eclipses China,
[2] BBC News, 2013, China’s growth forecast cut by IMF,
[3] Ibid
[4] Ibid
[5] D.Tang, 2013, China’s biggest graduating class enters what looks to be tightest job market as growth slows,
[6] Ibid

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