China's economy slows, three-child policy at risk

The services sector is growing at a slower rate because of rising inflation and slower export growth due to the ongoing pandemic. Employment forecast remains negative. For the China Labour Bulletin, young Chinese earn little and shy away from creating a family.


Beijing (AsiaNews) – China's economy is slowing down the post COVID-19 recovery.

The Caixin/Markit services purchasing managers’ index (PMI) fell to 55.1 in May, down from 56.3 in April but still well in expansionary territory. Above 50 it indicates growth.

The latest figure contradicts data published by China’s National Bureau of Statistics, according to which the non-manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 from 54.9 in April.

Caixin notes that orders and staff levels in service sector rose last month, but less than in April.

The slowdown follows lower exports as many foreign markets are still struggling economically from the effects of the COVID-19 pandemic.

Inflation rose in May as a result of more expensive raw materials, energy, staff and transport.

Companies have tried to offset losses by raising the selling price of their services, but the increases are not yet in line with those of the factors of production.

In manufacturing, the official employment index fell 0.7 points in May to 48.9, which should continue to decline in the coming months.

In services, the figure is slightly better (+0.2) but still below the growth threshold of 50.

With the job picture deteriorating, the government's policy to counter an expected drop in the population is at risk of being nipped in the bud.

China faces a real demographic challenge. In 2020 the population exceeded 1.4 billion, but compared to 2019 new births fell by 18 per cent, from 14.65 to 12 million.

On 31 May, the Politburo of the Communist Party of China announced that Chinese couples could have up to three children.

However, “Most people have responded with ridicule and sarcasm,” said a worker cited by the China Labour Bulletin (CLB).

Most Chinese families are facing rising living costs and intense work pressures, and are already spending a good chunk of their income on a child care.

The CLB points out that even in wealthy Guangdong province, wage growth is stagnant, and more and more workers don’t have any social benefits.

With little prospect of career advancement, young people prefer to ignore the social pressure to start a family.