Shanghai’s Covid restrictions add to China’s growing unemployment rate

New Delhi, April 18: China's unemployment rate in the last six months has been inching upward-albeit slowly at a time when about 10.76 million fresh graduates would be entering the jobs market. In February, the unemployment rate in urban China touched 5.5 per cent, exactly what it was in the corresponding month a year ago. Beijing has said that the unemployment rate is manageable, concerns are rising even as the unemployment rate is much lower than the 6.2 per cent recorded in February 2020-- just when the Covid 19 pandemic broke out and China was amid a stringent lockdown.

While stringent restrictions in Shanghai, the country's commercial capital, is likely to have an impact on the jobs market, unemployment rate was rising even before the resurgence of Covid 19 infections.

Last month, Chinese behemoths Alibaba and Tencent announced that they will cut a large number of jobs. According to reports, Alibaba could cut more than 15 per cent of its total workforce this year, affecting about 39,000 employees. Tencent too could look at reducing its workforce by 10 per cent. Beijing based e-commerce company JD.com is also firming up plans to shed jobs.

The jobless rate among those between the age of 16 and 24, representing graduates from schools and colleges is particularly high.

The South China Morning Post said that youth unemployment is already high in China and competition for jobs has been intensified by lay-offs caused by regulatory clampdowns.

"There is anxiety among citizens and especially with the current Covid-19 induced restrictions in Shanghai, the situation has become even more challenging," a foreign policy watcher told India Narrative. "However the authorities in the country are aware of the problem and are looking to take concrete measures to address this issue," he added.

Sources said that Chinese President Xi Jinping's call for Common Prosperity could also be disbanded for now.

China had set a GDP growth target of 5.5 per cent for 2022 after registering an expansion of 8.1 per cent in 2021. With the ongoing lockdown in Shanghai, many analysts have said that China's growth rate could be lower than the target.