Li Keqiang, the premier of China, has said that China’s economy needs to maintain a 7.2 percent growth rate in order to keep unemployment levels down, The New York Times reports.
According to remarks published Monday, Li elucidated that China’s government has been using estimates and calculations to project the minimum possible growth rate for the country to maintain a stable job market. The result was 7.2 percent, exactly in the 7-7.5 percent range that had earlier been calculated by Chinese officials as the lowest acceptable growth rate. With economic growth coming in at 7.8 percent in the third quarter of this year and at 7.5 percent in the first two quarters of 2013, China’s economy still has room to give before it closes in on Li’s threshold.
There is some uncertainly regarding the validity of Li’s comments. He claimed that each percentage point in growth creates between 1.3 million and 1.5 million jobs in the country, also discussing the role of exporting in ensuring that employment levels are sufficiently high.
However, such economic calculations are always a tricky business, complicated by the risk inherent in trying to track a highly integrated global economic climate. Then there is the issue of just what is meant by maintaining a stable job market: Li has stated that the urban unemployment rate would be no more than 4 percent, but that could neglect unemployment data from other parts of the country.
Li’s comments come on the verge of the so-called Third “Plenum” of the Chinese Communist Party, at which the group’s central committee will unite for a long weekend to discuss the status of China and possible policy changes, the Times reports.
While specifics are still unknown, a Chinese official has called the preliminary talks of reforms “unprecedented,” and many believe that significant economic changes will be on the table at the meeting. The loosening of restrictions on financial markets, different measures to promote consumerism, and the value of the yuan are all possible topics of discussion for Chinese politicians at the conference.
Meanwhile, both a report by Markit and Chinese official data confirmed that October was a good month for the Chinese services sector. The sector saw activity increase from September, which is good news for the Chinese government, as officials have stressed the importance of services alongside the country’s manufacturing and export industries.
Still, the services sector accounts for slightly less than half of Chinese economic activity; in the United States, it makes up nearly 80 percent of the economy.
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