Economist Cai Fang argues that problems in China’s labor market will hamper efforts to boost productivity in the years ahead. Cai examines the immediate impacts of COVID-19 and its aftermath on the labor market, concluding that as older workers and those in the informal sector exited the workforce, a “large portion of jobs lost to the epidemic cannot be expected to be regained.” In the long term, China will face deeper economic challenges as the growth in new workers slows. In addition, Cai argues that as growth becomes increasingly “innovation-driven,” there will be a surplus of workers who “do not have the human capital required for newly created jobs.”
Yao Yang, dean of the National School of Development (NSD) at Peking University, identifies three near-term challenges to China’s economic development. The first two—insufficient consumer demand and declining interest in real estate purchases — have both been affected by declining consumer confidence amid the COVID-19 pandemic and ensuing lockdown measures. The third challenge is the risk of recession in key export markets such as the United States and Europe, which may negatively affect Chinese exports. To address these challenges, Yao emphasizes the importance of policies designed to stabilize the real estate market, as well as measures to shore up consumer confidence (which he calls “more precious than gold”), such as direct payments to Chinese citizens. Yao suggests that Beijing should lead by example and implement a more “rational” approach to COVID-19 prevention and control. This speech was delivered to the China Economic Observation (CEO) conference just prior to the November 2022 protests across China opposing the Chinese government’s “dynamic zero-COVID” measures.