Chinese policymakers will probably find ways to keep the published unemployment rate close to their “around 5.5%” target for this year. But this may mask broader weakness in the labour market as a downturn in exports reduces new hiring, increases underemployment and weighs on wage growth. Our new China Labour Market Conditions Index captures these wider effects, providing a comprehensive view of the cyclical health of China’s labour market. It suggests that the labour market had been on the mend ahead of “Liberation Day”. But the US tariff shock has almost certainly derailed that nascent recovery.
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