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Economy

Urban employment declines, raising hopes for stimulus

BEIJING -- The job market in China's big cities is showing signs of worsening, raising the likelihood the government will boost spending on infrastructure and roll out other stimulus measures.

     New employment in China's urban centers slipped by 200,000 on the year to 3.24 million in the January-March quarter, the Ministry of Human Resources and Social Security said Friday. This marks the first decline since 2009.

     China's real economy grew just 7% in the three months, the slowest since the same quarter of 2009, not long after Lehman Brothers collapsed.

     For 2015, the government has set a growth target of about 7%, and is targeting at least 10 million new jobs in urban centers.

     This is a slowdown from 2014, when the economy grew 7.4% and 13.22 million jobs were created in the big cities. As a result, some real estate companies and resource developers in smaller cities have started to slash personnel.

     An official at the National Development and Reform Commission, the country's macroeconomic management agency, says that even though some industries have cut manpower, the overall job market is relatively stable. With job offers and seekers both falling, the offers-to-applicant ratio for the January-March period improved slightly to 1.12 from 1.11 a year earlier.

     Left untouched, unemployment may increase and criticism of the Communist Party may grow. Since stable employment is the biggest focus of the government's economic policy, expectations that bolder stimulus may be coming have grown in the market.

     On Monday, the People's Bank of China lowered the reserve requirement on bank deposits by 1 percentage point, more than the usual 0.5 point -- indicating that the bank seeks to prop up the economy that much more.

     The government will likely speed up development of such infrastructure as railways, and launch new investment projects in such key fields as communication networks and water facilities, according to another official at the National Development and Reform Commission.

     Tax breaks for small and midsize companies, monetary easing, and other steps are expected to be taken to prevent the economy from flagging.

Balancing act

But the current government led by Xi Jinping is reluctant to spend as much as was spent following the 2008 financial crisis. China then put together a 4 trillion yuan ($645 billion) stimulus package.

     Instability in the economy could undermine Xi's efforts to cut excess production capacity, among other things. He will have to walk a tightrope to put the economy on a track to steady growth.

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