Page last updated at 06:55 GMT, Thursday, 16 April 2009 07:55 UK

Optimistic signs for Chinese economy

By Michael Bristow
BBC News, Beijing

A job seeker at an employment fair in the city of Guangzhou
China says getting people back to work is its main task

China's latest economic figures showed a slowdown in growth - but also provided the country's leadership with some welcome news.

Government figures suggest China's economic performance will continue to improve during the remaining months of this year.

If that proves true, Chinese leaders should be able to maintain improving living standards and keep unemployment down.

Officials have voiced concern that rising unemployment could lead to social unrest and political instability, particularly in the countryside.

Willy Lam, of the Chinese University of Hong Kong, said: "The leadership will be happy that the economic downturn has not been as bad as anticipated."

Positive changes

China announced that economic growth in the first quarter of this year was 6.1%, down from 6.8% in the final three months of 2008.

But Li Xiaochao, the spokesman for the National Bureau of Statistics who announced the results, said the news was not all bad.

"We have seen some positive changes and the results are better than expected," he told a press conference in Beijing.

One of those positive changes is an improvement in industrial output, which was five percentage points higher in March than in January and February, he said.

Exports, a sector that has been hit hardest in this current recession, were still down in March, but not by as much as in the first two months of this year.

Chinese consumers were also buying more goods, said Mr Li. A total of 772,000 cars were sold last month, 22.4% up on the same month last year.

A chemical factory in the port city of Xiamen
Industrial output increased faster in March than in first two months of 2009

This is all good news for the Chinese government which, like the rest of the world, has been trying to avoid the worst affects of the global recession.

China's communist leaders have already admitted that at least 20 million migrant workers - people who move from the countryside to find employment in cities - have lost their jobs.

Mr Li said: "The reason we want to ensure fast and stable economic growth is to increase employment."

But he said he was also worried about the job prospects of more than six million university students who will graduate this year.

Social stability

China has been concerned that unemployed people could agitate for political change - a fear that has been repeated by numerous top leaders.

To prevent this from happening, it has made great efforts to keep unemployment to a minimum.

Mr Li said that billions of dollars were being spent to promote employment among China's migrant workers.

This group has been the most affected in the economic downturn because many work in factories making goods for export.

China has also been introducing non-economic changes to make sure the unemployed do not stage protests.

The leadership will be happy that the economic downturn has not been as bad as anticipated
Analyst Willy Lam

It was reported this week that local officials have been ordered to meet with ordinary people at least once a month to hear their complaints.

Despite the government's fears, a number of analysts play down the idea that an economic downturn will necessarily lead to social unrest.

Last month Louis Kuijs, the World Bank's senior economist in China, said: "Somewhat slower growth is not likely to jeopardise China's economy or social stability."

And so far, despite a number of localised disputes, mostly in southern China, there have been no major protests resulting from rising unemployment.

"The leadership should be happy that the nightmare scenario of large-scale unrest has not transpired," said analyst Willy Lam.

Although the Chinese economy still faces many difficulties, these latest economic figures should give the Chinese leadership hope that it has now avoided that possibility altogether.



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