Greater Bay closures, joblessness dog China's recovery, FBI arrests 2 over PRC police outpost & India, China bankroll Russia with above price cap oil purchases -- China Boss News 4.24.23

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Greater Bay closures, joblessness dog China's economic recovery

China’s first quarter growth of 4.5% was larger than anticipated “as restaurants and other services picked up following the end of the government's zero-COVID policy,” Nikkei Asia staff reported last week.

Although some economists and business analysts quickly raised their 2023 forecasts following the news, China Boss thinks the reality of China’s post-Covid recovery is much more complicated.

For starters, investor and media hype were based entirely on PRC’s National Bureau of Statistics (NBS) data, whose reliability has been questioned for years.

That said, there are two worrying structural trends that loom large over whatever rebound China is having.

Industrial collapse in the Pearl River Delta

In The Diplomat last week, Kung Chan revealed how Dongguan, "[o]nce a symbol of China’s industrial prowess,” is experiencing a number of massive factory shutdowns.

“Even with the easing of COVID-19 measures earlier this year, the situation has not improved significantly,” and “[m]any factories in Dongguan are grappling with heavy burdens and teetering on the brink of collapse,” he said.

Chan, The Diplomat:

A plethora of factories are grappling with prolonged shutdowns and leaves of absence. Despite hopes that surviving 2022 would bring relief, the reality is stark as there are no signs of improvement yet in 2023. Many manufacturing companies in the region have observed a significant shift in global supply chains, with no orders received this year. Factory closure notices are becoming increasingly succinct.

Unfortunately, according to Chan, a similar downturn is also occurring throughout the Pearl River Delta region, which includes the Greater Bay Area manufacturing hubs of Guangzhou, Shenzhen, Foshan, Jiangmen, Zhongshan-Zhuhai-Macau and Huizhou.

And that is very concerning.

Chan, The Diplomat:

Many of the quintessential “Made in China” manufacturers, which have persevered and struggled until the end, have not been spared from the unfolding crisis. These well-established enterprises, some with decades of business history, had assumed their prosperity would be everlasting. However, the reality is harsh as both private and state-owned manufacturing industries in the southeastern coastal regions of China face unprecedented challenges.

Said differently, China’s celebrated producers of electronics, toys, garments and textiles, plastic products, and a range of other goods - who led the region to achieve annual growth that "outpaced that of China as a whole" for over three decades - are at risk of bankruptcy.

Now, that’s news.

Millions of migrants and students can’t find jobs

While services and restaurants saw gains in the first part of 2023, long queues are becoming the norm for job hunters in traditional industries, Nikkei Asia staff noted. “Scenes of jobless migrants huddled in sleeping bags inside [a Shenzhen bus] station have drawn attention on social media,” they said.

Nikkei Asia:

At Longhua Station, which handles long-distance buses and other transportation in the southeastern city of Shenzhen, many agencies offer services to economic migrants from other parts of China, mostly jobs at electronic parts factories and other manufacturing plants. "I have been here for three days but there are no job offers matching my skills," said one job seeker who arrived at the station from a small city in Guangdong province at the end of March.

Meanwhile, in the face of rising unemployment, the Chinese government appears to have a new strategy of “shifting the blame for soaring youth unemployment on to jobless university graduates, accusing them of refusing to put aside their professional ambitions and take on manual labour,” a recent Financial Times report said.

FT:

In recent weeks, state broadcasters and news agencies have published more than a dozen profiles of recent university graduates who allegedly made a fortune in low-skilled jobs such as selling street food or growing fruit, rather than pursuing a career in their area of study.

The Communist Youth League last month criticised young graduates for holding on to their professional aspirations, accusing them of refusing to “tighten screws in factories” and exhorting the current generation to “take off their suits, roll up their sleeves and go to the farmland”.

Although Beijing currently says the youth unemployment rate is 18.1%, the inspiring folks whom I urge you to support at China Change say their sources suggest it is “far higher,” making it a matter “of grave political concern for the Communist Party.”

China Change:

Unlike the 1989 generation, today’s youth have not grown up with a keen interest in politics. But last November, they were the ones who took to the streets across major cities to protest the cruel and foolish zero-Covid policy. We do not know the deliberations within the CCP, but following the Blank Paper protests, the CCP may begin to see young people, besieged by unemployment, as a potent destabilizing force and take more forceful measures in response to this problem. It is perfectly in line with the CCP’s logic of nipping potential threats in the bud and maintaining regime security at all costs.

For the rest of Kung Chan’s report in The Diplomat, Dongguan’s Industrial Woes: China’s Manufacturing Sector Faces Tough Time, click here. For Nikkei Asia’s update, In China's Shenzhen the migrants are back, the jobs aren't, click here.

For FT’s report, China urges jobless graduates to ‘roll up their sleeves’ and try manual work, click here. For China Change’s April 7th report on youth unemployment, China Has a Youth Unemployment Problem; Guangdong Province Spearheads a Plan to Send 300,000 Youth to the Countryside by the End of 2025, click here.

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