Job growth remains top priority for Beijing this year

The Chinese government estimates it needs to find new jobs for nearly one million workers in the steel, coal and coal-fired power industries this year. But Premier Li yesterday gave assurance that the government will not allow any massive unemploymen
The Chinese government estimates it needs to find new jobs for nearly one million workers in the steel, coal and coal-fired power industries this year. But Premier Li yesterday gave assurance that the government will not allow any massive unemployment to happen.PHOTO: BLOOMBERG

Creating new jobs and ensuring laid-off workers can be re-employed remains a high priority for China this year, Premier Li Keqiang said yesterday.

For that to happen, the economy must continue to grow at a "medium to high pace", at about 6.5 per cent, which "will not be easy to meet", said Mr Li at a press conference yesterday, after the closing of the annual parliamentary session.

He told reporters that having enough jobs is of "paramount significance" for a large country like China, which has 1.3 billion people.

"Employment is the foundation of economic development. It creates wealth and is the major source of household income," he said.

Mr Li also gave assurance that the Chinese government would not allow any massive unemployment to happen despite the push to cut overcapacity in the steel, coal and coal-fired power industries. He estimated that the government needed to find new jobs for nearly one million such workers this year.

Although the economy grew 6.7 per cent last year - its slowest in 26 years - that is still considered a medium to high growth rate against the backdrop of a seven-year-low in global economic and trade growth, said Mr Li. "China's economy will continue to be a strong driving force in the face of a sluggish global economy recovery."

However, he acknowledged that there were domestic and external risks to the economy. Analysts have said that the mounting debt in the country, especially in its corporate sector, could spark a financial crisis in the next few years.

To assuage such fears, Mr Li said the government still had a lot of policy options at its disposal, such as room to expand the fiscal deficit and a strong capital base for banks.

"We need to fasten our seat belts and prevent any acute outburst of financial risks, and we will also make sure that we prevent any regional and systemic risks," he added.

When asked if China was contradicting itself by advocating globalisation and free trade while remaining overly protective of its domestic firms, he said the country was committed to opening up, but stressed that the process would be gradual.

Mr Li listed several initiatives, including the 11 free-trade zones in the country and the numerous ongoing trade and investment negotiations with other countries as proof of this commitment.

However, he warned that as the Chinese market opens "wider and at a higher level" to foreign investors, there would also be more friction in trade and investments.

A version of this article appeared in the print edition of The Straits Times on March 16, 2017, with the headline 'Job growth remains top priority for Beijing this year'. Print Edition | Subscribe