China faces nightmare if slowdown is not controlled
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The success or failure of China's efforts to revamp its giant economy may rest with workers like Hu Zhao and Deng Jindong. They were both at a job fair in Beijing this week. Hu, a 30-year-old former factory worker, was looking for a higher paid office job. Deng, a sales manager with Ping An Insurance Co, was trying to hire sales people to sell financial products. They represent two ends of a massive shift in the world's second-biggest economy being engineered by President Xi Jinping and Premier Li Keqiang, who are trying to manage a slowdown in growth to reduce a reliance on the investment that has made the country the factory to the world.
China's leaders hope to orchestrate the shift without creating a surge in unemployment by building up the services sector to take up the economic slack as factories close down. Failure to keep Chinese in jobs could threaten the social stability and economic prosperity that the Communist Party says justifies its one-party rule. "The persistent weakness in the manufacturing sector will have a bigger impact on jobs," said Lian Ping, chief economist at Bank of Communications in Shanghai. "There is no room for complacency."
As Beijing shifts the economy away from manufacturing, the growth that has been the envy of the world for decades is slowing down. In fact, it has eased in nine of the last 10 quarters. That included in April to June, when GDP rose by 7.5 percent from a year earlier, high by developed-economy standards but China's second-weakest expansion since the global financial crisis. The government has shown little concern about the slowdown and has been vague about the growth level it sees as necessary to prevent a serious rise in unemployment. Economists estimate that level to be at least 7 percent.