Economy

BEIJING/HONG KONG (Reuters) – Having failed to find his dream job at a Chinese internet company upon graduation, Peter Liu settled for a role in a state library where there is so little need for his participation that he spends his time studying for a change in his career path.”It’s really hard to get work at big companies,” said the 24-year-old who majored in TV production at a Beijing university before moving back home in the central Henan province.Liu got the librarian job after a government-led campaign to secure temporary work for graduates, which analysts describe as a short-term solution to preserve social stability in a slowing economy with little on offer for young Chinese.Such “welfare jobs,” as they are known in China, include roles as receptionists, office administrators, security guards and community workers. Various government institutions offer such jobs every year, but they had usually drawn applications from disadvantaged groups, such as elderly or disabled people.This year, amid a deepening youth joblessness crisis in the world’s second-largest economy, even remote rural positions have seen intense competition from young Chinese with diplomas from top universities, graduates and economists say.The government sees employment as key to pacifying China’s most pessimistic generation in decades, while graduates gaining even limited work experience can also benefit their future employers if the economy recovers, analysts say. The one-to-three year contracts pay roughly the minimum wage in the region, typically between 2,000 and 3,000 yuan ($275-$412) per month, sometimes including free meals – much less than their average expectation for a first job salary of 8,033 yuan, according to a survey by Chinese recruitment firm Liepin. A separate programme aiming for 1 million internships this year has courted state-owned and private firms for participation.The Ministry of Human Resources and Social Security, which did not reply to a request for comment on the government programmes or the job market, told state media last week youth employment was improving.China has in the past year eased some regulatory burdens on tech, property and finance firms – traditionally large employers of new talent. But state media editorials have also encouraged young graduates to take lower skilled jobs.On Wednesday, the statistics bureau is expected to omit for the fourth consecutive month the release of youth unemployment data, suspended in July after reaching a record 21.3% in June, just as 11.6 million fresh graduates were entering the job market.The total take-up of short-term jobs and internships remains unknown, but social media posts commenting on the selection process and discussing career options are frequent and analysts expect such roles will be in demand in a slowing economy. Still, the state sector – which provides a fifth of the urban jobs in China – can only temporarily alleviate economic pressure for a portion of university graduates through such campaigns, economists say, warning youth unemployment remains a major long-term headache for Beijing. “Youth unemployment will stay with us for quite a long time, at least for five-to-10 years,” said Wang Jun, chief economist at Huatai Asset Management, adding the temporary jobs are “a short-term fix for stability, to relieve social conflicts brought by joblessness.”China had witnessed high youth unemployment in the late 1970s and early 1980s as educated youth returned to cities after working the farmlands under Mao Zedong, as well as in the late 1990s when the country began shrinking inefficient state conglomerates.A 23-year-old graduate surnamed Chen said she beat more than a dozen applicants in August to a secretary job at a local agriculture centre in the southwestern city of Chongqing. “The gap between my dreams and reality is huge,” said Chen, who wanted to become a teacher.Chen and Liu are both using the slow days at work to study for the highly-competitive 2024 civil service exam, which drew a record 2.6 million applicants, according to state media. If they pass, they would start on one of the most coveted career paths in China, often referred to as the “iron bowl” of financial stability.Liu never expected to go for a public sector career, but for now he is at least happy that he can take that chance.”I don’t want my parents to see me staying at home all day with nothing to do,” said Liu.($1 = 7.2851 Chinese yuan renminbi) (additional reporting by Beijing newsroom; Graphics by Kripa Jayaram and Ellen Zhang; Editing by Shri Navaratnam) More

SAN FRANCISCO (Reuters) -U.S. Treasury Secretary Janet Yellen called on Pacific Rim finance ministers on Monday to boost the productive capacity of their economies while working to finance the transition to low-carbon energy and provide more opportunities for the poor.Opening a meeting of finance ministers of Asia Pacific Economic Cooperation countries, Yellen said the group’s economic dynamism meant the actions they take matter for addressing global challenges.Yellen said in prepared remarks that the 21 APEC economies needed to collaborate to meet goals for the 2023 U.S. hosting year of creating an “open, dynamic, resilient, and peaceful Asia-Pacific community.”A day after the APEC Secretariat issued new forecasts for slowing growth next year citing the inflation fight and U.S.-China tensions, Yellen said the group needed to increase potential output. “We need to further improve our long-term economic outlook by boosting labor supply, innovation, and infrastructure investment, in ways that are also sustainable and reduce inequality,” Yellen said.”We need to put ourselves on a sustainable growth path, one where we safeguard our planet while providing our economies with the clean energy they need to grow. And we need to leverage emerging technologies to drive innovation while maintaining safe financial markets,” Yellen added.Treasury released a research paper saying expenditures to reduce carbon emissions now would reduce costlier damages from more frequent and powerful storms, floods and forest fires.It cited research estimating that spending $50 billion per year to build higher bridges and move transportation routes inland for 136 coastal cities around the world would reduce expected annual economic losses from climate change in 2050 by nearly $1 trillion.The APEC finance ministers meeting precedes the APEC leaders’ summit this week and a high-stakes meeting between U.S.-President Joe Biden and Chinese President Xi Jinping aimed at easing tensions between the world’s two largest economies.On Friday, Yellen agreed with her Chinese counterpart, Vice Premier He Lifeng, to “intensify communication”, while warning Beijing’s new economic czar to crack down on Chinese that are aiding Russia’s Ukraine war effort.The agenda for the meeting includes bringing more workers into APEC country workforces, investments in infrastructure and research and mobilizing resources to accelerate net-zero emissions goals. Yellen cited the Just Energy Transition Partnerships for Vietnam and Indonesia, financed by G7 countries, multilateral development banks and private sector investors as prime examples.The meeting also includes discussions on developing carbon markets and Treasury’s principles for financial firms’ net-zero pledges that will require their lending and investments to align with goals to limit the global temperature increase to 1.5 degrees Celsius by mid-century, “responsible development” of digital assets.Yellen is due to hold a closing news conference on Monday evening. More

The Fed is expected to deliver four 25 basis point cuts next year, lowering rates from 5.375% to 4.375% in 2024, Morgan Stanley forecasts, followed by eight cuts in 2025, pushing its benchmark rate to 2.375% by the end of 2025. That is above current market expectations for the Fed funds rate to end next year in a range of 4.50% to 4.75%, or 4.625% at the midpoint, suggesting three rate cuts for next year. And well above the Fed’s own projections for two rate cuts in 2024.     Others, however, have opted for a bolder forecast, with UBS expecting 275 basis points of cuts next year, while Goldman Sachs maintained a more cautious outlook calling for a single rate cut starting in Q4 next year.Expectations for deeper rate cuts than expected will likely be driven by the slowdown in economy economic growth, brought on by the Fed’s higher for longer interest rate regime.But this slowdown, Morgan Stanley forecasts, will be kept in check by a labor market that will underpin consumer spending as companies hoard workers and more people join the workforce.  “We see job growth slowing into 2024 and 2025, but labor hoarding will help keep the unemployment rate low, underpinning our call for a soft landing,” Morgan Stanley said, forecasting GDP to slow from an estimated 2.5%  in 2023 to 1.6% in 2024, and 1.4% in 2025. As the Fed stares down the last mile on inflation, the central bank can count on two main forces to extend the disinflation trend: Lagged effect of supply-chain healing throughout 2024 and softer demand. The improvements in the global supply-chain — that was clogged up during the pandemic and contributed to a surge in good prices — will continue the disinflation trend, led by falling goods prices at a time when consumer demand is also on the wane. “We expect negative monthly prints in core goods inflation through the forecast horizon,” Morgan Stanley said.While an ongoing slowdown in goods inflation will be welcomed by many, the Fed has signaled out “super core” inflation, or services inflation excluding-housing, as its main focus, and pointed to the labor market and wages as a key source of price pressures. But Morgan Stanley believes the link between labor markets and inflation has been less clear.Transportation services, which is less affected by wage pressures and more by auto insurance premiums, the bank says, has been one of the major drivers of “super core” inflation and fortunately for the Fed is likely slow. Car insurance companies have ramped up their premiums to soften the blow to margins from the impact of historically high losses, but going forward, high car insurance costs will eventually recede to “historical rates as companies finish resetting insurance premiums,” Morgan Stanley said.”We see core PCE inflation slowing from 3.5% in 2023 to 2.4% next year, and to 2.1% in 2025.” it added. More

WASHINGTON (Reuters) -Top U.S. Senate Democrat Chuck Schumer on Monday expressed tentative support for House Republicans’ short-term funding bill that would keep the federal government open past this weekend.Schumer halted progress on the Senate’s proposed funding plan, a step that would allow the House to move first. This may encourage some House Democrats to back the plan if hardline Republicans deny Speaker Mike Johnson the votes for the bill he has proposed.Any bill keeping the government open past the current Nov. 17 funding cliff “will have to avoid pushing steep cuts and poison pills” that hardline Republicans have demanded, Schumer cautioned in a floor speech. He added that he was “pleased that Speaker Johnson seems to be moving in another direction.”Johnson has proposed a short-term funding bill, known as a continuing resolution or CR, that would keep spending at fiscal year 2023 levels until January and February for different parts of the government.”The Speaker’s proposal is far from perfect, but the most important thing is that it refrains from making steep cuts while avoiding a costly government shutdown,” Schumer said.Hardline Republicans have rejected this plan because it does not include steep budget cuts, but Schumer’s tentative support suggests Johnson could afford to lose their votes and pass his CR with Democratic support.”Bipartisanship is the only way to avoid a government shutdown,” Schumer added. More

The heightened scrutiny follows a period of significant banking sector stress. In March 2023, the collapse of Silicon Valley Bank and Signature Bank (OTC:SBNY) sparked widespread concern over regulatory gaps and prompted calls for more rigorous federal oversight. These events highlighted vulnerabilities within the banking system, particularly in relation to interest rate risk management and liquidity planning.Concerns escalated further in June 2023 when apprehensions about the commercial real estate market grew. US bank regulators, including the Federal Reserve, encouraged lenders to extend support to credit-worthy borrowers facing difficulties due to rising borrowing costs. This guidance was aimed at property owners who were grappling with the impact of higher interest rates on their loan obligations.Just last week, a report from the Fed highlighted ongoing efforts to monitor potential losses in banks related to commercial real estate and elevated interest rates. The central bank has been particularly watchful for signs of credit quality deterioration in both consumer and commercial real estate lending segments.Barr’s upcoming testimony is expected to shed light on how the Federal Reserve is addressing these complex issues and ensuring that banks remain resilient amid economic headwinds. The focus will likely be on how regulators are adapting their oversight strategies to mitigate risks and protect the financial system from future disruptions.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

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The administration will no longer try to announce the completion of the trade terms this week, after prominent Democrats objected to some provisions.The Biden administration has pulled back on plans to announce the conclusion of substantial portions of a new Asian-Pacific trade pact at an international meeting in San Francisco this week, after several top Democratic lawmakers threatened to oppose the deal, people familiar with the matter said.The White House had been aiming to announce that the United States and its trading partners had largely settled the terms of its Indo-Pacific Economic Framework for Prosperity, an agreement that aims to strengthen alliances and economic ties among the United States and its allies in East and South Asia.But Senator Sherrod Brown, Democrat of Ohio, and other prominent lawmakers have criticized the pact, saying it lacks adequate protections for workers in the countries it covers, among other shortcomings.The Biden administration, facing the possibility of additional critical public statements, has decided not to push to conclude the trade portion of the agreement this week, and has been briefing members of Congress and foreign trading partners in recent days on its decision, the people said.The agreement has been a key element of the Biden administration’s strategy to counter China’s growing influence in Asia by strengthening relations with allies. The framework’s partners include Australia, Indonesia, Japan, South Korea and Singapore and together account for 40 percent of the global economy.The Indo-Pacific Economic Framework for Prosperity has four main parts, or “pillars.” The first portion, which the administration completed in May, aims to knit together the countries’ supply chains.The Biden administration still appears likely to announce the substantial conclusion this week of two other big portions of the agreement, one on clean energy and decarbonization and another on taxation and anticorruption. The Commerce Department negotiated those two pillars, as well as the supply chain agreement.But the thorniest part of the framework has been the trade pillar, which is being overseen by Katherine Tai, the U.S. trade representative, and her office. The trade negotiations cover issues such as regulatory practices, procedures for importing and exporting goods, agriculture, and standards for protecting workers and the environment.Congressional Democrats, including Senator Ron Wyden of Oregon, who leads the Senate Finance Committee, have expressed concern over the labor and environmental standards. Lawmakers of both parties have criticized the administration for not closely consulting Congress during the negotiations, while others have been dismayed by the administration’s recent clash with big tech firms over U.S. negotiating positions on digital trade.Katherine Tai, the U.S. trade representative, second from left, has pledged to include tough labor standards in the agreement.Jason Henry/Agence France-Presse — Getty ImagesIn a statement last week, Mr. Brown, who is facing a tough re-election fight next year, called for cutting the entire trade pillar from the agreement, saying it did not contain strong enough protections to ensure workers aren’t exploited.“As the administration works to finalize the Indo-Pacific Economic Framework, they should not include the trade pillar,” Mr. Brown said. “Any trade deal that does not include enforceable labor standards is unacceptable.”Members of Congress and their staffs had communicated concerns about a lack of enforceable provisions in meetings for several months, one Senate aide said.In a meeting with White House officials this fall, officials from the Office of the United States Trade Representative proposed waiting until next year to announce the completed trade pillar, at which point all of the agreement’s contents, including the labor provisions, would be settled, according to a person familiar with the deliberations, who was not authorized to speak publicly.But White House officials were eager to have developments for President Biden to announce during the meetings in San Francisco. U.S. trade officials pushed their partners in foreign countries in recent weeks to complete a package of agreements that did not include the labor provisions, intending to finish them in 2024.After Mr. Brown’s public objections, the White House and the National Security Council asked to pull back on the announcement, the person who is familiar with the deliberations said.A spokesman for the National Security Council said in a statement that the Biden administration had focused on promoting workers’ rights and raising standards throughout the negotiations, and that the parties were on track to achieve meaningful progress.A spokesperson for Ms. Tai’s office said it had held 70 consultations with Congress while developing and negotiating the Indo-Pacific framework and would continue to work with Congress to negotiate a high-standard agreement.The decision to push back final trade measures until next year at the earliest is a setback for the Biden administration’s strategic plans for Asia. It’s also a demonstration of the tricky politics of trade, particularly for Democrats, who have frequently criticized trade agreements for failing to protect workers and the environment.Ms. Tai worked with Mr. Wyden, Mr. Brown and others during the Trump administration, when she was the chief trade counsel for the House Committee on Ways and Means, to insert tougher protections for workers and the environment into the renegotiated North American Free Trade Agreement.Ms. Tai has pledged to include tough labor standards in the Indo-Pacific agreement, which covers some countries — such as Malaysia and Vietnam — that labor groups say have low standards for protecting workers and unions. But critics say the power of the United States to demand concessions from other countries is limited because the deal does not involve lowering any tariff rates to give trading partners more access.While doing so would promote trade, the Biden administration and other trade skeptics argue that lower barriers could hurt American workers by encouraging companies to move jobs overseas. A previous Pacific trade pact that proposed cutting tariffs, the Trans-Pacific Partnership negotiated by the Obama administration, fizzled after losing support from both Republicans and Democrats.In a statement, Mr. Wyden said senators had warned Ms. Tai’s office for months “that the United States cannot enter into a trade agreement without leveling the playing field for American workers, tackling pressing environmental challenges and bulldozing trade barriers for small businesses and creators.”“It should not have taken this long for the administration to listen to our warnings,” Mr. Wyden said. “Ambassador Tai must come home and work with Congress to find an agreement that will support American jobs and garner congressional support.” More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.The spotlight currently shining on Japan’s yen, and speculation around whether Tokyo will intervene to prevent further depreciation, will likely intensify on Tuesday with traders poised to push the currency to a fresh 33-year low.Chinese President Xi Jinping’s visit to San Francisco on Tuesday for the Asia-Pacific Economic Cooperation leaders summit – where he will meet U.S. President Joe Biden the next day – will grab much of the news headlines, but probably won’t move markets much.Before those face-to-face talks, and absent major Asian economic data releases or policy events, the greatest potential for market-moving action on Tuesday could be in currencies.The yen hit its lowest level in more than a year on Monday, near the key psychological level of 152.00 per dollar, but rallied sharply amid a flurry of options-related trading.Market participants say there has been no sight of Japanese authorities in the market – not yet, anyway – and Japanese Finance Minister Shunichi Suzuki reiterated that the government will keep monitoring the FX market and respond appropriately.Currency traders may be tempted to test Tokyo’s resolve again on Tuesday. The policy pressures facing Japanese authorities are intense, and the potential risks to financial markets if policymakers misstep are growing.After battling against deflation for decades, the Bank of Japan is moving away from ultra-loose policy. It’s a delicate and complicated path to navigate though.Bond yields are the highest in a decade and rising, the yen is the weakest in decades, stocks are near their highest in more than three decades, and according to Goldman Sachs, financial conditions are the loosest in more than three decades.As Deutsche Bank’s George Saravelos put it on Monday, normalizing policy and unwinding the world’s biggest carry trade – which he pegs at $20 trillion – will not be easy or pain free.More broadly, investors in Asia go into Tuesday’s session on a reasonably strong footing following Monday’s gains, but with little impetus to add to them.The MSCI emerging market and Asia ex-Japan indexes both snapped four-day losing streaks on Monday, rising 0.5% and 0.6%, respectively, but trading on Wall Street was listless. It was also listless in U.S. Treasuries, although this is perhaps a good thing given that Moody’s (NYSE:MCO) cut the U.S. credit ratings outlook on Friday.In corporate news, the major earnings releases on Tuesday include Japanese financial giants Mitsubishi UFJ (NYSE:MUFG) and Sumitomo Mitsui (NYSE:SMFG) Financial Group, while figures are expected to show that India’s annual wholesale price inflation rate, which has been negative since April, was -0.2% in October.Here are key developments that could provide more direction to markets on Tuesday:- India wholesale price inflation (October)- Chinese President Xi Jinping visits the U.S.- Fed’s Jefferson, Barr, Mester and Goolsbee all speak (By Jamie McGeever; Editing by Josie Kao) More