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Business Standard
3 days ago
- Business
- Business Standard
China's soft spot in trade war with Trump: Risk of huge job losses
US President Trump taunted China in his first term, claiming his tariffs had led to the loss of five million jobs there. In a 2019 tweet, he said his trade policies had put China 'back on its heels.' Economists sharply disputed how much pain Trump's tariffs caused, but the message underscored the centrality of jobs to China's export-reliant economy. Four months into Trump's second term, the United States and China are again negotiating over tariffs, and the Chinese labour market—especially factory jobs—is front and centre. This time, China's economy is struggling, leaving its workers more vulnerable. A persistent property slowdown that worsened during the Covid-19 pandemic has wiped out jobs and made people feel poorer. New university graduates are pouring into the labour pool at a time when the unemployment rate among young workers is in the double digits. 'The situation is clearly much worse,' said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at investment bank Natixis. As employment opportunities in other sectors disappear, she said, the importance of preserving China's 100 million manufacturing jobs has grown. Natixis said that if US tariffs stayed at their current levels of at least 30 per cent, exports to the United States would fall by half, resulting in a loss of up to six million manufacturing jobs. If the trade war resumes in full, job losses could surge to nine million. China's economy has struggled to recover from the pandemic, expanding more slowly than during Trump's first term, when growth topped 6 per cent a year. Although the Chinese government has set a target of around 5 per cent growth this year, many economists predict the actual figure will fall short. In early 2018, China reported its urban jobless rate had fallen to a 15-year low and that the country had created a record number of new jobs. Since then, government crackdowns and tighter regulations have subdued industries like technology and online education—once-thriving sectors that generated numerous jobs. Over those years, unemployment climbed, especially among young people. The jobless rate among 16-to-24-year-olds was 15.8 per cent in April, a slight improvement from the previous month. However, the figure is expected to surge again when 12 million new college graduates enter the workforce this year. In 2023, when youth unemployment reached a record 21.3 per cent, the Chinese government suspended the release of the figures. At the time, one prominent economist claimed the real figure was closer to 50 per cent. Beijing resumed publishing the data last year using a revised methodology that lowered the reported rate. At the same time, even those with jobs are in a more precarious position. Fewer companies are offering full-time roles, relying instead on gig workers for services like food delivery and manufacturing. While those jobs offer flexibility, they typically pay less and come with few protections or benefits. In late April, Yu Jiadong, a senior official at China's Ministry of Human Resources and Social Security, said the government had prepared measures to maintain employment stability, particularly for Chinese exporters.
Time of India
18-05-2025
- Business
- Time of India
Chinese job markets shiver as US-China trade talks fall cold
A breakthrough in US-China trade talks in Geneva has brought some hope for China's battered manufacturing sector, but the damage may have already wrecked many factory workers, as the job market remains tight. Tensions in the trade war have relaxed, sparing Beijing from a potentially severe crisis, widespread job losses that could have threatened social stability, a cornerstone that has helped the Communist Party to retain power and legitimacy. Dampened by the US tariff hikes of 145%, the Chinese economy continues to struggle, even after the trade talks, hurting the job market and slowing down the economy, Reuters reported. Will tariff cut bring back the sentiment ? While the talks have helped avert the crisis, challenges remain. A senior policy adviser close to the matter described the outcome as 'a win for China,' adding, 'factories will be able to restart operations and there will be no mass layoffs, which will help maintain social stability.' However, with tariffs still standing at around 30%, on top of pre-existing duties, businesses remain cautious. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Gentle Japanese hair growth method for men and women's scalp Hair's Rich Learn More Undo 'It's difficult to do business at 30%,' the adviser said. 'Over time, it will be a burden on China's economic development.' Before the Geneva meeting, signs of distress were evident. Beijing had grown alarmed at rising bankruptcy risks in labour-intensive sectors such as toys and furniture, according to sources cited by Reuters last week. Lu Zhe, chief economist at Soochow Securities, estimated that the number of jobs at risk has fallen to below 1 million, down from a range of 1.5 to 6.9 million before the tariff cut. Even so, Alicia Garcia-Herrero, chief Asia Pacific economist at Natixis, warned the threat hasn't vanished, predicting the current tariff levels could still lead to 4 to 6 million job losses. 'When you increase the tariffs to such a high level, many companies decide to stop hiring and to start basically sending the workers back home,' she said. 'At 30%, I doubt they will say, okay, come back.' To cushion the impact, the Chinese government is stepping in with targeted investment and other measures. Last week, the People's Bank of China unveiled a scheme to direct cheap funding toward service industries and elderly care, sectors seen as having potential to absorb displaced workers. 'On employment, the most important driver will come from increased government investment given that the enthusiasm for corporate investment has yet to rise,' said Jia Kang, president of the China Academy of New Supply-Side Economics. Despite official efforts, the mood remains bleak on the ground. While Beijing may have avoided the worst-case scenario, for many, the scars of the tariff war are likely to linger far longer. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
South China Morning Post
28-01-2025
- Business
- South China Morning Post
DeepSeek breakthrough, Nvidia rout raise concerns over massive AI spending
DeepSeek, a little-known Chinese start-up whose affordable technology matches the likes of the most formidable American tech titans such as OpenAI and Meta Platforms, has raised investor concerns over the necessity of pouring billions of dollars into research and development. The Chinese artificial intelligence (AI) company released its open-source reasoning model, R1, earlier this month. The model's capabilities roughly match those of advanced models from OpenAI, Anthropic, and Google while having significantly lower training costs. 'The impressive performance/cost dynamics have raised investor concerns about the necessity of the billions of dollars of capital expenditures by large US tech companies and the billions more they are planning to spend on generative AI in the coming years,' said Malik Ahmed Khan, an equity analyst from Morningstar. Large US tech companies may follow suit and replicate some of the AI training techniques that DeepSeek leveraged to drive the cost of R1 down, he said in a research note on Tuesday. When DeepSeek launched, it quickly became the most downloaded app in Apple's US AppStore. The better-than-expected performance of DeepSeek led to a sell-off of Nvidia and tech peers on Wall Street on Monday. Its shares plunged 17 per cent to US$118.58, erasing almost US$600 billion of market value. Nvidia's logo and a decreasing stock graph are seen in this illustration taken January 27, 2025. Photo: Reuters 'This was bound to happen, and it could have come from anywhere,' said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis. 'It came from China, all the more so, in a way, to see a correction.'
