New data on China's economy reveals job losses, contraction

March 31, 2017

BEIJING - A large-scale, independent survey from the Cheung Kong Graduate School of Business (CKGSB) in Beijing has shed new light on the current state of the Chinese economy.  The most prominent change revealed in the survey of some 2,000 companies in China's industrial sector was a significant rise in product prices in Q4 2016, with production costs seen as the main driving factor.

Meanwhile, the survey's overall Business Sentiment Index (BSI) stood at 46, indicating a slight contraction, with investment sluggish and overcapacity staying at its historical high.
Authored by CKGSB Professor of Finance, Gan Jie, the survey was based on stratified random sampling by industry, region and size from China's National Bureau of Statistics' company database. With much official data widely questioned, her results shed some light on how the industrial sector is truly coping and what types of reforms are needed.
Commenting on the survey's results , Prof Gan Jie described 2016 as a difficult year for China’s industrial economy. “The BSI stayed at 46 for four consecutive quarters, marking a continued, if slight, contraction,” she said. “This is a result of sluggish investment.
“The main theme of the industrial economy in 2017 will still be reduction of overcapacity, while inflation and cost rises should be carefully watched. Against this background of overcapacity, it remains our view that a loosening of monetary policy would not revive the industrial economy."
In recent years, China has focussed on upgrading its industrial sector: automation now plays an increasingly important role, but the human cost is real.
Based on the size distribution of firms with employment reduction and the number of industrial workers in total, the report estimates that a total of 5.5 million jobs were lost in 2016.  www.ckgsb.edu.cn (ATI).