Services sector, other industries to ease layoff pressures, says analyst
China's top economic planner on Wednesday said there won't be large-scale layoffs, even as the country takes robust measures to curb overcapacity, and the government is able to keep the yuan's exchange rate stable.
It is the latest reassurance from top government agencies since the lunar new year holidays. Observers said the government is trying hard to ease concerns over the Chinese economy, particularly in areas such as employment and in improving market confidence.
"We believe based on the current state of our country's economy there won't be a new round of layoffs," Zhao Chenxin, a spokesman for the National Development and Reform Commission (NDRC), told reporters in Beijing Wednesday.
Zhao said China's economic fundamentals have not changed, which will support employment. He also cited mass entrepreneurship and innovation and a "relatively active" labor market as favorable conditions.
"Our balance of payments remains positive, cross-border capital flows are also within a normal range, and the yuan's exchange rate has been stable against a basket of currencies," Zhao said.
He said China still has the world's largest foreign exchange reserve, a "relatively large-scale" trade surplus and stable development in the yuan's internationalization. These can all help stabilize the yuan's exchange rate, he said.
Zhao's comments on Wednesday follow collective, positive messages about the country's economy from top officials in the past few days.
"If employment is stable, the broader fundamentals of the Chinese economy will be stable," Premier Li Keqiang said during a meeting of the State Council, China's cabinet, on Sunday.
Li said employment levels in China remain stable, and incomes continue to rise faster than GDP. Li also noted that the unemployment rate in the country stood at 4.99 percent in January, which, for a country with 1.3 billion people, is "not easy," according to the article.
In an interview with Chinese media Saturday, Zhou Xiaochuan, governor of the People's Bank of China, dismissed concerns that China is intentionally devaluing the yuan against the dollar to support exports and GDP growth.
Zhou also said that, with a trade surplus of nearly $600 billion last year and stable economic growth, China will be able to overcome speculative forces and keep its exchange rate stable.
Such comments from top officials hope to ease concerns over the Chinese economy after turmoil in global markets and tumbling commodity prices during the holidays, said Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges.
"A new round of pessimism over the Chinese economy emerged from the turbulence during the holidays," Wang said, adding rising concerns over employment from slower economic growth and measures to cut industrial overcapacity also sparked official responses.
The world's second-largest economy registered its lowest growth rate in 25 years last year, growing at 6.9 percent. January exports in U.S. dollar terms declined 11.2 percent from the previous year, and imports fell 18.8 percent, according to official data released on Monday.
According to an article posted on the NDRC website, if the country decides to cut capacity by 30 percent in industries facing the most serious overcapacity issues, including the steel, coal mining and cement sectors, in the next two to three years, 3 million people would be retrenched.
On Wednesday, Zhao conceded there would be layoffs in some industries from curbing overcapacity, but he said the government will provide funds to help laid off workers.
Wang added that fast growth in the services sector and other emerging industries could also help ease unemployment pressures.
Liu Xuezhi, an analyst at Bank of Communications, said the yuan's recent "periodic depreciation" against the dollar and rising speculative forces targeting the Chinese economy sparked officials' reassurances on the currency's stability.
"It's all about improving investors' confidence in the Chinese economy," Liu told the Global Times Wednesday. He said the yuan's exchange rate will be "relatively" stable because the Chinese economy is still growing at a medium-to-high pace and persistent yuan depreciation is not in China's interest for the long run.
