Explore the challenges of obtaining accurate economic data in China, including the use of anecdotes to analyze the weakening economy. Learn about the alarming increase in urban youth unemployment and its long-term consequences. Discover the impact of the pandemic, political circumstances, and paused publishing on China's economy. Hear personal stories of young people struggling to find jobs and their aspirations for the future.
China's economy remains weak with higher unemployment and plummeting house sales, contradicting the theory of revenge spending.
The China beige book provides unofficial insights into China's economy, indicating mixed trends in household spending and conservative consumer behavior.
Deep dives
Revenge spending theory debunked in China's weak economy
Despite the theory of revenge spending, where Chinese consumers were expected to spend lavishly after COVID-19 restrictions, China's economy remains weak with higher unemployment and plummeting house sales. Official statistics do not show evidence of revenge spending. However, anecdotal evidence and unofficial data discussed in the podcast highlight the impact of reduced international tourism, fear of travel to China due to political circumstances, and new regulations hindering foreign investment. The lack of household-focused stimulus and conservative spending habits in Chinese consumers also contribute to the absence of revenge spending.
China beige book sheds light on economy through anecdotes
The China beige book, a private company collecting large-scale data inside the Chinese economy, offers insights into China's economy using anecdotal and unofficial numbers since the government has paused releasing some economic data. The beige book report revealed mixed trends in household spending, with industries like travel and chain restaurants seeing strength while retailing, especially auto sales, showed a decline. The report highlights that Chinese consumers are conservative in their spending habits and patterns, and the absence of household-focused stimulus has hindered the anticipated revenge spending.
Youth unemployment rises in China, impacting the economy
China has seen a surge in youth unemployment, with the urban youth unemployment rate hitting 21% in June, significantly higher than pre-pandemic levels. Factors contributing to the high rate include a decline in high-paying entry-level jobs in law, finance, tech, and government, as well as long working hours and intense workplace pressure. The inability to find desired jobs has left young people with other options, contributing to a significant number of unemployed young individuals. The economic consequences of a large youth population out of the labor force could be long-term lower productivity and potential social issues.
In China, data on the economy is sometimes difficult to come by. The Chinese government has put a pause on releasing some of its official economic data. But many of the stories emerging from the country paint a clear picture: the second largest economy in the world is struggling.
Today, our friends at The Indicator share some of their recent reporting on China. First up, it's a special edition of the Beigie Awards focused entirely on China. What can the approach of the Federal Reserve's Beige Book - i.e. looking at anecdotes that tell us something about where the economy is headed - show us about China's economy?
Then, we take a deep dive into one of the most alarming indicators in China: the skyrocketing urban youth unemployment rate.
This episode was hosted by Darian Woods, Wailin Wong, and Robert Smith. The original Indicator episodes were produced by Corey Bridges with engineering by Robert Rodriguez. They were fact-checked by Cooper Katz McKim and Sierra Juarez. They were edited by Paddy Hirsch and Kate Concannon.