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China pulls out stops to avoid lay-offs as economy cools

6 May3:23 PM

[BEIJING] As growth in China's sagging economy looks on the verge of spilling below 7 per cent, officials worried about a spike in unemployment are pulling out all the stops to avoid mass lay-offs.

State firms are encouraged to keep idle workers employed, subsidies and tax breaks are given to companies that do not fire their workers, and some businesses are even enticed into hiring despite the slackening economic growth.

The measures appear to be working for now, said a senior economist at the Development Research Centre, a think-tank affiliated to China's cabinet. "There is no big problem in employment. They (top leaders) are more worried about financial risks and debt risks," said the economist, who declined to be named.

But things could change quickly.

In one of the first signs of distress in China's labour market, the Liaoning government said in April it had slashed its 2015 job creation target to 400,000 from 700,000, to reflect a"severe" employment trend.

That came in the wake of data that showed Liaoning, one of three rustbelt provinces in northeastern China, grew just 1.9 per cent in the first three months of the year, the slowest of China's 31 provinces and regions.

Disappearing job opportunities or a spike in unemployment are always a concern for China's stability-obsessed government, especially with 7.5 million university graduates estimated to join the labour market this year.

A rise in the jobless rate could spur government to stronger policy action to cushion the world's second-largest economy from what will this year be its slowest growth in a quarter of a century. "As long as we can prevent people from losing their jobs and prevent social unrest, we should raise salaries and provide social security and pensions," said a researcher at China's powerful economic planner, the National Development and Reform Commission.

In the first quarter, when growth slipped to 7 per cent, the official unemployment rate barely budged.

It stood at 4.05 per cent at the end of March, compared with 4.1 per cent at the end of 2014.

But the official figure is widely recognised as a flawed measure since it does not properly account for China's 274 million rural migrant workers, those most vulnerable to job losses in a cooldown.

Indeed, a handful of indicators already suggest mounting pressure. A private survey of China's factory sector showed factories have cut jobs for 18 months, while official data showed job creation across the country slowed in the first quarter to 3.24 million, from 3.44 million a year ago.

Worse, a range of disappointing economic data in March stoked worries that annual growth may fall below 7 per cent in the coming months, retreating further from the 7.2 per cent growth that Premier Li Keqiang said was needed in 2014 to create 10 million new jobs.

To keep employees in their jobs, local governments are doing what they can.

Authorities in Shaanxi in central China are giving companies that do not dismiss workers, or dismiss the bare minimum, subsidies worth half the employment insurance that they pay, according to Chinese media reports.

But Julia Wang, an economist at HSBC in Hong Kong, doubts China can avoid a rising unemployment rate for long and could struggle to hit its 10 million new jobs goal this year. "Employment is fundamentally related to economic growth,"she said. "This year's job creation target will be in danger. It will not be as easy for the target to be exceeded as in previous years."

REUTERS

   
 

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China to start building 3rd generation nuclear reactor: company

6 May4:28 PM

[BEIJING] Construction of China's first "third generation" nuclear reactor will start on Thursday, a state-run company said, as Beijing attempts to export its atomic energy designs globally.

Unit five of the Fuqing nuclear power plant in Fujian province will incorporate an ACP1000 reactor developed by the China National Nuclear Corporation (CNNC), the firm said Wednesday.

The ACP1000 is one of a "third generation" of reactors designed to extract more energy from a given amount of uranium fuel than previous technologies, and in a safer way.

Other third-generation reactors are under construction elsewhere, with competing designs by French group Areva, Westinghouse of the US, and South Korea's Kepco, among others.

CNNC touts its reactor as "a production of independent innovation", although industry reports say it is related to a French design imported to China in the 1990s.

"This project is also very important for our nuclear going-global strategy," CNCC's general manager Qian Zhimin told reporters.

Mainland China has 26 nuclear power reactors in operation, 23 being built, and more about to start construction, according to the World Nuclear Association.

"China's policy is to 'go global' with exporting nuclear technology including heavy components in the supply chain," it adds on its website.

CNNC said an ACP1000 has been exported to Pakistan, and a deal was signed in February for a sale to Argentina.

Qian said CNNC was in negotiations to sell ACP1000 technology to more than 20 countries, but did not provide details.

Beijing suspended approvals of new plants following a series of meltdowns at Japan's Fukushima nuclear power plant in March 2011 after a tsunami struck.

But it resumed approvals in 2012, despite a warning the same year from the environmental ministry that the country's nuclear safety situation was "not optimistic".

Nuclear power is a key element of China's attempts to tackle its chronic pollution, with the use of coal for energy blamed as a major cause of the problem.

AFP