China Macro Tracker: Hong Kong boost and green plans

Research evidence excerpt

China Macro Tracker: Hong Kong boost and green plans

r improvement in consumption. The

unemployment insurance fund expenditure reached RMB88.1bn in Jan-May, the highest for this

period on record, and almost on par with 2020 (chart 7). Meanwhile, the surveyed youth urban

unemployment rate remained elevated at 15.6% in May (chart 6).

The rise in fund expenditure is likely driven by the expansion of policy-backed employment

support as the government aims to expand coverage for hard hit demographics or under-

covered groups. This year there will be a new record of 12.7 million graduates, while flexible

and migrant workers typically see less coverage of social benefits.

Unemployment insurance fund expenditure not only covers unemployment payments but also

finances for employment support measures including job stabilisation subsidies, skill

enhancement subsidies, and training subsidies. In 2020 and 2022, years that were heavily

impacted by the pandemic, policy measures helped to backstop the labour market through

stronger job stabilisation and skills support programmes, contributing to higher fund

expenditure. Employment stabilisation subsidies notably increased in those years, accounting

for 22.6% and 24.2% of total fund expenditure, respectively.

The State Council recently released the 15th Five Year Plan for China’s employment strategy,

highlighting stronger support for key groups such as university graduates and flexible workers to

stabilise employment expectations and boost confidence (see China Macro Tracker, 10 June).

As implementation progresses, four ministries announced on 2 July that policies such as job

retention refunds, hiring expansion subsidies, and skills upgrading subsidies will be extended

through to end-2026.