China’s urban employment, per capita spending recorded rare declines in 2022

BEIJING, Feb. 28 (Reuters) – Employment in China’s cities fell last year for the first time in six decades and per capita spending also fell rarely as harsh COVID-19 restrictions hit the world’s second-largest economy. ravaged the world.

The new data from Statistics Netherlands also showed the smallest income growth in more than three decades.

The number of urban jobs in China fell by 8.4 million to 459.31 million, the first drop since 1962.

“The decline in the urban workforce reflects the severe economic challenge China faced last year,” Zhiwei Zhang, president at Pinpoint Asset Management, wrote in a note to clients.

He cited the shrinking size of China’s labor force, job losses due to the pandemic, and the slowdown in rural workers migrating to cities as the main reasons for the decline.

However, Zhang added that he expects this to be a temporary drop now that China has abandoned its draconian zero-COVID policy to stamp out any outbreak.

China experienced economic growth of just 3% in 2022, one of the weakest levels in nearly half a century.

Per capita spending fell by 0.2% in real terms, data from the statistics office showed. That followed a 12.6% jump in 2021, marking only the third such drop since records for that data point began in 1980. Retail sales also fell 0.2%, the second worst performance since 1968.

Xu Tianchen, an economist with the Economist Intelligence Unit, said a sharp fall in income growth for China’s lowest income earners was a key factor behind the weak spending data.

“Before the pandemic, the lowest income group was one of the fastest growing, but now, quite remarkably, it has become the slowest income group, dropping from 10.1% (income growth) to 5.2%.”

China’s disposable income per capita grew by just 2.9% in real terms, the second smallest increase since 1989.

Unadjusted, disposable income per capita grew to 36,883 yuan ($5,310) last year, while per capita spending rose to 24,538 yuan.

Rural areas outperformed urban areas, with rural households’ disposable income growing by 4.2% in real terms, compared to a 1.9% growth for urban dwellers.

Reporting by Joe Cash; Additional reporting by Kevin Yao and Liz Lee; Edited by Edwina Gibbs

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