The magic dance around China’s annual GDP has become a different ball game, tells economist Arthur Kroeber in the China Money Podcast. And linking the country’s economic growth to the growth of jobs is nonsense anyway.
The China Money Podcast:
Q: So you think growth will be slower than 7%, the magic number that’s just enough to provide sufficient employment for China’s massive labor force?
A: This statement is never true. People started talking about the minimum 7% number in late 1990s and early 2000s. At that time, the government was slashing tens of millions of jobs in state-owned enterprises. The population of young people was expanding dramatically. In those days, it’s difficult to grow fast enough to generate enough jobs.
Today, state-owned enterprises are net employers. More importantly, the number of young people entering the labor force every year is shrinking. You simply don’t need to create the same amount of jobs now.
Also, the structure of the GDP growth is much more important than the level of growth when you try to figure out how many jobs are being created. An aluminum smelter and 10,000 little retail stores may record the same GDP growth, but the number of jobs being created may be five times different.
So this whole notion that you have to generate a specific number of GDP growth to generate a certain amount of jobs is just nonsense.
The China Weekly Hangout is likely to resume activities again coming Thursday, and will start with another open office session to discuss upcoming subjects. On the last hangout, China old-hands Steve Barru and Fons Tuinstra had a first discussion on 8 July on the upcoming issues.
Watch this space and our China Weekly Hangout page for more announcements.