China’s job market is finally turning a corner. After three bleak years that saw unemployment in China’s cities touch multiyear highs - almost one-fifth of urban youth were jobless at one point - Fidelity’s analysts now expect companies in China to expand their workforces by an average of 5 per cent in 2023, making the country one of the hottest job markets in the world.
That is well above the corporate headcount growth that our analysts forecast for Japan (1.3 per cent), or the rest of the Asia-Pacific excluding China and Japan (2.1 per cent). In much of the world, including North America and Europe, companies on aggregate are expected to cut jobs.
The rapid recovery unfolding in China also looks different from previous cycles, as policymakers pivot from the investment-led growth of the past to relying on consumption as the economy’s main engine. That suggests new job creation this time could come from sectors associated with consumer spending, both online and offline, instead of the construction or industry employment created from China’s traditional investment-led growth cycles.
In logistics, for example, we see daily parcel volumes back to growth on a year-on-year basis as the world’s largest e-commerce marketplace heats up. As China’s peak of the winter wave of Covid infections appears to have passed and shoppers again open their wallets (and virtual wallets), delivery and pickup stations are running at full capacity and nearly all available couriers have returned to work.
At consumer discretionary companies, we observe that managements are encouraged by early signs of an economic rebound and have started to shift from survival to growth mode, prompting headcount expansion. Revenue growth in China is set to be faster than in any other major market this year, according to our 2023 Analyst Survey.
Data in China for January is still showing subdued hiring on the back of the Covid ‘exit’ wave and a long Lunar New Year holiday. But from the bustling streets of Beijing to packed warehouses in Guangzhou, we believe the stage is set for a consumption-led recovery — and it could not have come at a better time for China’s millions of job seekers.
