Xi highlights employment woes in speech published before US vote

President Xi Jinping highlighted pressures facing China’s employment market in a newly published speech that painted a turbulent time for the world’s No. 2 economy, as officials try to arrest a growth slowdown.

“China is entering a period where strategic opportunities as well as risks and challenges coexist, and unexpected factors are rising,” Xi said in the speech published Thursday, making a veiled reference to tensions with the U.S. and his nation’s transition away from property-driven growth.

“The pressure on stabilizing growth and employment will persist,” the top leader added, in comments carried by the ruling Communist Party’s Qiushi magazine on the cusp of an American election that could redefine China’s relationship with the U.S. Donald Trump has vowed to impose a 60% tariff on his nation’s biggest economic rival if reelected.

While Xi made the remarks at a Politburo study session in May, China’s propaganda machine often publishes his speeches months — or even years — after taking place, as a way of signaling policy priorities. Investors are currently closely watching any signals from the senior leadership for signs of what fiscal support a huddle of lawmakers next week will rubber stamp in the next stage of China’s stimulus rollout.

“This article indicates that unemployment rate may become a more important policy target than before,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “I think it makes the fiscal deficit more likely to rise above 3% next year.”

China’s job market has been bruised by a prolonged property crash that has strained local government finances and caused the nation’s longest deflationary streak since 1999. Widespread salary cuts and lay-offs in industries from finance to tech have been one of the biggest drags on consumption, something U.S. Treasury Secretary Janet Yellen has called on leaders to address as Beijing faces a rising tide of tariffs overseas.

“Enhancing employment quality has become workers’ urgent desire,” Xi said in the May speech, as public discontent mounted over the grinding economic slowdown. Fewer births, an aging population and the economy’s digitization are all contributing to deepening structural problems frustrating employment, according to the Chinese leader.

Xi pledged to make full employment a “priority goal” and youth employment the “focus of the focus” at the May meeting. The government has rolled out measures in recent weeks to support groups struggling with jobs, such as one-off cash handouts to residents facing hardship and an expanded student scholarship and loan program.

China’s State Council also said it will provide some social security benefits to college graduates who haven’t found a stable job two years after leaving school. The country introduced a similar initiative in 2020 when the pandemic first hit.