context: Growth is closely connected with political and social stability. The centre is keenly aware of the risk of social unrest spilling over into the political sphere, and it will go all out to prioritise employment and ensure public expectations are met.
‘Employment first policy’ is a new expression in top-level government documents, set as a top-level macroeconomic priority. Previous emphasis on employment mostly fell into the social policy sphere; unemployment and labour market indices cannot influence central bank policies, but now the time is ripe, says Cai Fang 蔡昉 Chinese Academy of Social Sciences vice president. The most urgent agenda is to enhance policy implementation and reduce inequality in public services across urban-rural, regional, household registration, and employment type lines, adds Cai.
A comprehensive indicator for development and social stability, structural unemployment challenges are emerging under mounting uncertainties including labour shortages in big cities and oversupply in small cities as well as deterioration of employee welfare, says Liu Yuanchun 刘元春 Renmin University vice president. Tackling structural unemployment is trickier than aggregate unemployment because the latter can be solved with rapid growth but the former depends on specific labour groups from both supply and demand sides, argues Liu Wei 刘伟 Renmin University president.
The government work report also fleshed out quantitative growth targets. GDP growth is set to 6.0-6.5 percent, a slight downward adjustment compared to 6.5 percent in 2017 and 2018 and 6.5-7.0 percent in 2016. As long as GDP growth reaches 6.2 percent over the next two years, the 2020 objective to double GDP is achievable, says Huang Shouhong 黄守宏 State Council Policy Research Bureau director and lead author of the report. Lower growth is acceptable when employment and income grow and the environment improves, adds Huang. Given higher-than-expected growth in 2017 and 2018, says Huang, it is reasonable to lower the target in the face of complex problems and downward economic pressure. Lowering the growth target aligns with gradual economic transition, shifting growth drivers, unsolved institutional problems, distorted resource allocation, and the diminishing demographic dividend, says Liu Yuanchun.