The NBS non-manufacturing new orders PMI fell to 47.8 in January. Employment decreased at a faster rate: the employment sub-index declined to 46.9, the lowest reading since the start of the series in 2007 (barring the February 2020 plunge). Job prospects for University graduates have dimmed: the number of jobs available per applicant among recent graduates fell to 0.88 in Q4 2021, just above the low of 0.79 in Q2 2020.
The drop in employment is a structural feature of an economy that continues to rely on export-led growth. Employment will remain weak if productivity improvements in the manufacturing sector do not help drive an expansion in services.
China has embarked on an unprecedented automation drive, aiming to double the intensity of robots in manufacturing over the next five years. The administration’s new five-year plan for smart manufacturing, unveiled at the end of last year, aims for a rapid digitization.
Global sales by Chinese semiconductor companies surged 30.6% y/y to reach $39.8bn in total annual sales in 2020, capturing 9% of the global market, according to data from the SIA. In short, China is moving up the value chain, quickly. The next target is the global auto market.
The trade surplus with the EU hit an all-time high of $208.7bn in 2021. China runs a goods surplus of $88.5bn with the Netherlands. And the trade deficit with Germany has narrowed sharply, from $25.3bn in 2019 to just $4.8bn in 2021.
China’s integration with Germany has deepened, with Germany companies putting pressure on Lithuania to back down in its dispute with China over Taiwan. The importance of China as a trading partner for Germany increased again in 2021, with China-Europe freight trains significantly boosting interconnectivity between the two nations.
