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China's urban unemployment rate stays below 4 percent for second straight quarter

Reuters

BEIJING (Reuters) - China's registered urban unemployment rate stayed below 4 percent for the second consecutive quarter as the world's No. 2 economy maintained a robust growth trajectory in 2017's first half.

China's urban registered unemployment rate was 3.95 percent at end-June, compared with 3.97 percent at end-March and 4.05 percent a year earlier, the Ministry of Human Resources and Social Security said on Friday.

On an annual basis, the official unemployment rate was last below 4 percent in 2001, when it was 3.6 percent. The rate ended last year at 4.02 percent after not budging from 4.1 percent from 2010 through 2015.

The registered urban jobless rate excludes China's 280 million migrant workers.

Julian Evans-Pritchard, China economist at Capital Economics, said the registered urban jobless rate "does not capture migrant unemployment and tends to be too stable to tell us much about economic conditions".

"But other data such as jobs-to-vacancies ratios and income growth suggest the labor market has been strong lately," he said.

The economy expanded a faster-than-expected 6.9 percent in the second quarter on the back of firmer exports and manufacturing, setting China on course to meet the government's 2017 growth target.

But analysts broadly expect economic growth to slow in the second half of 2017 as China's red-hot property sector cools and borrowing costs for firms climb.

Short-term borrowing costs have risen after regulators launched a crackdown on riskier types of financing.

"The labor market will likely deteriorate in the coming year as the economy slows with the withdrawal of policy stimulus," Evans-Pritchard said.

STRUCTURAL PROBLEMS

In March, Premier Li Keqiang said China added 13.14 million urban jobs in 2016 and aims to add another 11 million this year while keeping the registered unemployment rate below 4.5 percent.

The ministry said on Friday that 7.35 million new jobs were created in the first six months of 2017.

However, China still faces structural problems in the labor market, ministry spokesman Lu Aihong told a media briefing in Beijing, adding that there is demand for about 15 million new urban jobs each year.

China's cabinet said in April that risks of mass unemployment in some regions and sectors have increased.

The government plans to further cut excess and inefficient capacity in its mining sector and "smokestack" industries this year as part of efforts to upgrade its economy and reduce pollution.

Resettlement of workers who lose jobs in the coal and steel sectors has been stable and orderly, the ministry said.

(Reporting by Elias Glenn and Ryan Woo; Additional writing by Beijing Monitoring Desk; Editing by Richard Borsuk)