December 9, 2023

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New Data on China’s Economy Reveal Job Losses, Contraction

Theo tin CKGSB A large-scale, independent survey from the Cheung Kong Graduate School of Business(CKGSB)...

Theo tin CKGSB

A large-scale, independent survey from the Cheung Kong Graduate School of Business(CKGSB) in Beijing sheds new light on the current state of the Chinese economy.

BEIJING, March 30, 2017 /PRNewswire/ — The most prominent change revealed in CKGSB’s large-scale quarterly survey of around 2,000 companies from China’s industrial sector was a significant rise in product prices in 2016 Q4, with about a quarter of firms reporting product price inflation above 10%. Production costs were the main driving factor, with the unit cost diffusion index jumping from 57 in Q3 to 73 in Q4, while raw material costs and labor costs both increased sharply.

Production in Q4 registered its first expansion in six quarters, mainly driven by consumer goods. Meanwhile, the survey’s overall Business Sentiment Index (BSI) stood at 46, indicating a slight contraction, while investment remained sluggish and overcapacity stayed at its historical high.

Elsewhere, overcapacity, inflation and cost rises should be carefully watched in 2017, according to the report’s author Gan Jie, Professor of Finance at CKGSB, who commented that a loosening of monetary policy would not revive China’s industrial economy, given the country’s overcapacity issue.

Described as the first of its kind, Professor Gan’s large-scale, micro-level quarterly company survey is based on stratified random sampling by industry, region and size from China’s National Bureau of Statistics’ company database, with around 2,000 firms responding to her survey each quarter. With much official data widely questioned, her results shed light on how the industrial sector is truly coping and what types of reforms are needed.

Commenting on the survey’s results, Prof Gan Jie said, “2016 was a difficult year for the industrial economy. The BSI stayed at 46 for four consecutive quarters, marking a continued, if slight, contraction. This is a result of sluggish investment. The persistent loosening of monetary policy has caused product prices to turn from deflation in the first half of 2016 to significant inflation in the fourth quarter.”

Prof Gan continued, “The main theme of the industrial economy in 2017 will still be the reduction of overcapacity, while inflation and cost rises should be carefully watched. Against this background of overcapacity, it remains our view that a loosening of monetary policy would not revive the industrial economy.”

Despite the current challenges, the vast majority of firms remain “optimistic” (9%) or “cautiously optimistic” (53%) about their economic outlook over the next three to five years, up from 6% and 51%, respectively, this time last year. However, innovation – as measured by R&D spending – remains on a downwards trend, with 80% of firms reporting no R&D spending, while just 5% of firms said they spent more than 5% of sales on R&D.

In recent years, China has focused on upgrading its industrial sector: automation now plays an increasingly important role, but the human cost is real. Based on the size distribution of firms with employment reduction and the number of industrial workers in total, the report estimates that a total of 5.5 million jobs were lost in 2016, greater than in 2015.

At a time when trustworthy data on China is increasingly hard to come by, these survey reports from China’s leading independent business school, CKGSB, provide timely and reliable facts, as well as objective analysis on the Chinese economy. To read the report in full, please click here.


Established in Beijing in November 2002 with support from the Li Ka Shing Foundation, Cheung Kong Graduate School of Business is China’s first faculty-governed and independent business school. CKGSB boasts more than 40 full-time professors, who have earned their PhDs or held tenured faculty positions at leading schools such as Harvard, Wharton and Stanford. Their research has provided the basis for more than 400 case studies of both China-specific and global issues. CKGSB also stands apart for its unmatched alumni network. More than half of CKGSB’s 10,000+ alumni are at the CEO or Chairman level and, together, their companies account for one sixth of China’s GDP.

CKGSB is located in Beijing, Shanghai, Shenzhen, New York, Hong Kong and London. The school offers the following innovative courses: MBA, Finance MBA, Executive MBA, Business Scholars Program (DBA) and Executive Education programs.