Employment and consumer spirit important to promote consumption
Policy measures to reduce social funding costs usually promote domestic income and expenses. However, China’s real estate market, labor market status and US-China trade war have affected uncertainties, affecting consumer demand.
China’s unemployment rate fell from 5.1% in April to 5% in May. However, young unemployment (except 16–24, except students) paint a separate picture. In May, the young unemployment rate fell from 15.8% to 14.9% in April, above 14.2% in May 2024. In this summer, a record 12.22 million students are expected to graduate, possibly affecting the labor market.
Consumer’s feelings may worsen in the coming months, keeping in mind another potential spike in young unemployment, reflecting a bounce during the epidemic. The effectiveness of Beijing’s efforts to promote consumption by weakening consumer spirit can be tested.
Targeting young unemployment remains a major focal point, in which the Chinese government started subsidy to hire fresh graduates and unemployed youth for the first firms.
While Tuesday’s guidelines are important, domestic competition and price wars are another obstacle that companies face to expand the workforce. The US-China trade war has promoted domestic competition, underlining the importance of a business deal.
US-China Trade War Trus: Is China compromising?
In June, China and the US interacted in London, agreed to stick to the 90-day trusteen terms. However, China will require a significant increase in export licenses for rare-earth magnet exports to display compliance and maintain goodwill under Trus.
The Coby letter commented on rare-earthly kissing export trends, stating:
“China’s total export versions of China’s rare-earth magnets declined by year-on-74% in May, the biggest monthly decline on records. It falls after 45% decline in April. The total rare-earth kissing exports reached 1.2 million kg last month, which is at least from February. 90% global supply.
Efforts can be affected by Beijing’s domestic income, emotion and consumption by increasing the US-China trade war and intensifying domestic value wars.
Natix Asia Pacific’s Chief Economist Alicia Garcia Herero recently commented on the fragility of trade war Trus and said:
“Risk is different for the London deal. Because the rare earth is a very granular issue and mistakes can be made.”
Hong Kong and mainlands move forward despite China market tariffs
The US-China trade war has failed to trigger a wide-based sales in Hong Kong and mainland markets. Despite restricting China’s access to America’s technology, Hang Seng Tech Index and Round Hahil Dragon ETF is 20.33% and 19.98% year-over-Tarikh (YTD), while the NASDAQ Composite Index has increased by only 3.43%. In particular, the roundhill luxurious seven ETFs are just 0.15% ytd.
Meanwhile, the demand for mainland shares has increased due to reducing US-China trade tension. The CSI 300 and the Shanghai Composite Index increased by 2.96% and 3.15% in June, behind the Nasdaq Composite Index (+4.5%). Hong Kong’s Hang Seng index increases by 4.51%.