By Jennifer Cheung

The job market in China, particularly in the more economically developed eastern provinces, contracted noticeably in the second quarter of this year. According to the latest labour market survey [2] published by the Ministry of Human Resources and Social Security, China’s eastern region saw the number of job applicants increase by 132,000 in the second quarter, while the number of job vacancies only increased by 5,000 compared with the first quarter.

The survey indicated that there was still a national over-supply of jobs but that the gap between the number of jobs offered and the number of job seekers was narrowing. In the second quarter there were 6.33 million vacancies compared with 6.04 million applicants.

Workers in the eastern coastal provinces continue to lose their jobs as the manufacturing sector suffers from a downturn in orders. A worker at Zhejiang’s Hikvision, one of the world’s biggest video surveillance products suppliers, said the purchasing department had already let go three or four staff out of 40 people in total, while several others had been demoted.

And an engineer at a Guangzhou-based industrial automation company said orders in the first two quarters had clearly declined from the same period last year. The low-end electronics market is highly competitive, and sluggish sales had impacted the Research and Development department as well, he said. However, he added that top-line growth was likely to improve if the company could secure bids for several state-funded projects in the second half this year.

Macro-economic data shows the economy is still stuttering. The HSBC China Manufacturing PMI in July dipped below 50 to reach 49.3, while the official Chinese PMI published by China Federation of Logistics and Purchasing was 50.1. The CFLP noted a third monthly decline is likely to accentuate worries about China’s economic slowdown. A reading below 50 indicates the manufacturing economy is contracting.

Qu Hongbin, chief economist China and co-head of Asian Economic Research at HSBC, said in a press release on 1 August that China still faces downside pressures persistent with deteriorating external markets, and that Beijing is likely to step up policy easing in the coming months to support growth and employment.