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China promises funds to help economy, sets no growth target – Yahoo Canada Finance

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China boosts spending but no big steps for virus-hit economy

BEIJING — China’s top economic official on Friday promised higher spending to revive its coronavirus-battered economy and curb surging job losses but avoided launching a massive stimulus on the scale of the United States or Japan.

Premier Li Keqiang, in a speech to legislators, said Beijing would set no economic growth target, usually a closely watched feature of government plans, in order to focus on fighting the outbreak.

The battle against the virus “has not yet come to an end,” Li warned. He called on the country to “redouble our efforts” to revive the struggling economy.

The coronavirus pandemic that began in central China in December and prompted the government to isolate cities with 60 million people added to strains for the ruling Communist Party that include anti-government protests in Hong Kong and a tariff war with Washington.

China, which has reported 83,000 virus cases and 4,634 deaths, was the first economy to shut down factories, shops and travel to fight the virus and became the first to reopen in March. But it is struggling to revive activity.

Private sector analysts say as many as 30% of the country’s 442 urban workers — or as many as 130 million people — lost jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.

The government’s budget deficit will swell by 1 trillion yuan ($140 billion) this year to help meet targets including creating 9 million new urban jobs, Li said. That is in line with expectations of higher spending but a fraction of the $1 trillion-plus stimulus packages launched or discussed by the United States, Japan and Europe.

“These are extraordinary measures for an unusual time,” the premier said in the nationally televised speech.

Li said Beijing set no growth target due to the “great uncertainty” of the epidemic and to enable officials to focus on other goals.

The world’s second-largest economy contracted by 6.8% over a year earlier in the three months ending in March after factories, offices, travel and other businesses were shut down to fight the virus. Forecaster expect little to no growth this year, down from 2019’s 6.1%, already a multi-decade low.

The big deficit “indicates significant policy support for the domestic recovery,” said Louis Kuijs of Oxford Economics in a report.

However, Beijing is reluctant to launch a stimulus that would add to already high Chinese debt and strains on the financial system, Kuijs said.

Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing’s technology ambitions and trade surplus. The premier gave no details, but President Donald Trump has threatened to back out of the deal if China fails to buy more American exports.

Strains with Washington have been aggravated by Trump’s accusations that Beijing is to blame for the virus’s global spread.

Also Friday, the government announced spending on the ruling party’s military wing, the People’s Liberation Army, will rise but by only 6.6%, its lowest rate in several years.

The PLA is world’s largest standing army and, supported by the world’s second-highest military spending after the United States, has expanded its arsenal to include aircraft carriers, stealth fighters and other high-tech weapons.

This year’s annual session of the ceremonial National People’s Congress is being held under pervasive anti-disease controls. Legislators and government officials are holding news conferences by video instead of meeting reporters face to face. Reporters are required to undergo laboratory tests for the virus before being allowed into the official press centre .

Delegates also will take up proposed national security law for Hong Kong, the legislature announced Thursday. No details were announced, but Beijing has pushed for measures in Hong Kong such as punishment for showing disrespect for the Chinese flag and increasing patriotic-themed education in schools.

Such a move has long been under consideration and was prompted by anti-government protests in Hong Kong that began in June over a proposed extradition law and have expanded to cover other grievances.

The proposal for the NPC to take action prompted criticism by opposition Hong Kong lawmakers that Beijing is violating the autonomy promised to the former British colony when it returned to Chinese sovereignty in 1997.

Li, the premier, called on government officials to make progress in an array of areas including employment, trade, attracting foreign investment, meeting the public’s basic living needs and ensuring the stability of industrial supply chains.

Li warned that ensuring economic growth was “of crucial significance” even though Beijing set no official target. He said pressure on employment has “risen significantly.”

Automakers and other manufacturers say production has rebounded almost to normal levels, but consumer spending, the main engine of economic growth, is weak amid widespread worries about potential job losses.

Forecasters say China is likely to face a “W-shaped recovery” with a second downturn and millions of politically volatile job losses later in the year due to weak U.S. and European demand for Chinese exports.

Beijing will give local governments 2 trillion yuan ($280 billion) to spend on preventing job losses, making sure the public’s basic needs are met and helping private companies survive, Li said.

Li said despite the focus on the virus, the ruling party also hopes to achieve longer-term goals this year including eliminating rural poverty. Among other things, the epidemic disrupted work toward achieving the party’s promise to double economic output and incomes from 2010 levels by this year.

“We will give priority to stabilizing employment and ensuring people’s livelihood, resolutely win the battle to overcome poverty, and strive to achieve the goal of building a moderately prosperous society,” the premier said.

Joe McDonald, The Associated Press

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Economy adds surprise 290,000 jobs in May; unemployment rate at record level – The Globe and Mail

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A worker unloads a delivery of 200,000 masks at a Vancouver city depot, on June 3, 2020.

JONATHAN HAYWARD/The Canadian Press

Canada added 290,000 jobs in May after two months of brutal layoffs, a surprise turn for the job market as provinces have only recently begun to ease lockdown restrictions.

Despite the gain, the unemployment rate rose to 13.7 per cent, the highest since comparable data became available in 1976, as more people started seeking jobs.

“The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,” said Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, in a note to clients.

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About three-quarters of May’s increase was in full-time positions, while the goods-producing sector (5-per-cent gain) snapped back more forcefully than services (1-per-cent gain).

In turn, men saw stronger employment growth (206,000) than women (84,000). Statistics Canada noted that among parents, women registered fewer job gains than men and were more likely to lose hours.

The total number of hours worked in all industries climbed 6.3 per cent in May, following a plunge of nearly 28 per cent between February and April. There were sizable increases in construction (19 per cent), wholesale and retail trade (11 per cent) and manufacturing (10.9 per cent).

Quebec accounted for nearly 80 per cent of May’s employment increase as it saw a net gain of 231,000 workers. The province allowed the construction industry to return in mid-April and other restrictions began to ease outside the Montreal area in early May.

Ontario was the only province where employment declined last month, although losses were less severe than in March and April. The first stage of the province’s reopening plan took effect after the Victoria Day weekend.

Going into Friday’s job report, it was widely assumed that Canada would experience another month of layoffs. The median estimate from economists was for employment to decline by 500,000 in May, following April’s loss of nearly two million and March’s drop of about one million.

This was partially the result of timing. Statistics Canada surveyed households on their work status between May 10 and 16. By then, many reopening stages had yet to take effect.

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Instead, Friday’s results surprised by showing that employers are already adding to payroll.

As Canada enters its summer months, there are mounting signs of economic activity picking up. Hiring site Indeed Canada has seen a recent uptick in new job postings. Consumer spending, while lower than a year ago, has improved in recent weeks, according to Royal Bank of Canada transaction data. And home and auto sales have perked up, as has business sentiment.

Still, it’s shaping up to be a long recovery in the job market. Many companies are reopening to weaker sales and larger debt obligations, making it difficult to staff at prepandemic levels.

Only 13 per cent of small business owners are planning to add to full-time staff in the next three months, compared to 37 per cent who are planning to cut back, according to recent survey results from the Canadian Federation of Independent Business.

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U.S. economy added 2.5 million jobs in May as states reopened from COVID-19 shutdowns – CBC.ca

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The unemployment rate in the United States unexpectedly fell in May and layoffs abated, the Department of Labour said Friday in a report that showed the latest signs the economic downturn caused by the COVID-19 pandemic was bottoming.

The department’s closely watched monthly employment report showed the jobless rate dropped to 13.3 per cent last month from 14.7 per cent in April. Nonfarm payrolls rose by 2.509 million jobs after a record plunge of 20.687 million in April.

Economists polled by Reuters had forecast the jobless rate jumping to 19.8 per cent in May from 14.7 per cent in April. Nonfarm payrolls for May had been expected to fall by eight million jobs.

The jobs market improved considerably in the second half of May as businesses reopened after shuttering in mid-March to slow the spread of COVID-19. Consumer confidence, manufacturing and services industries are also stabilizing, though at low levels, signs the worst may be over.

“The good news is that we probably have hit the bottom,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. “But the recovery will be painfully slow. It will take years, probably a decade to get back to where we were at the end of last year.”

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Canada can hit climate targets without ruining economy, economists and climate experts say – CBC.ca

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Last November, the United Nations Environment Program released its annual Emissions Gap Report, which found that in order to limit global warming to 1.5 C above pre-industrial levels, CO2 emissions would need to drop by 7.6 per cent annually over the next decade. 

Given that worldwide emissions are estimated to have risen by about 0.4 per cent in 2019, this seemed like an unattainable goal.

A recent study published in Nature Climate Change, however, suggests that as a result of global shutdowns due to the COVID-19 pandemic, emissions in 2020 could drop by roughly seven per cent.

At first glance, it might appear as though a devastating economic shutdown is the only way to reach those UN targets. But some experts say this isn’t the case, and insist there is a way to have economic growth and reduce emissions that adhere to the UN guidelines.

Storefronts in Ottawa’s Glebe neighbourhood are reflected in a window sign on March 24, 2020, during the COVID-19 pandemic. (Justin Tang/The Canadian Press)

“We can’t have this [kind of a shutdown] for tackling climate change — absolutely not,” said Corinne Le Quéré, a Canadian professor of climate change science at the University of East Anglia and lead author of the Nature study. “This is a really painful way to get a decrease in emissions.” She also noted that it likely won’t last.

Don Drummond, an economist who worked for the federal Department of Finance for 23 years, pointed out that emissions in Canada have almost flat-lined, on average, over the past few years during a period of economic growth (prior to the coronavirus pandemic).

This, he said, is evidence that reducing emissions to UN guidelines is possible.

“We’ve achieved higher growth with flattening emissions and we can and should go further and achieve positive growth with declining emissions,” said Drummond, an adjunct professor at Queen’s University and former chief economist at the Toronto-Dominion Bank. “That can be done, but we need a more concentrated policy effort.”

New opportunities

Drummond, who was one of the architects of the Goods and Services Tax in 1991, said there is a long history in Canada of scare-mongering that a given new policy will kill the economy, from the GST to the North American Free Trade Agreement. Quite often, it doesn’t.

Many governments around the world are trying to stimulate their economies during the pandemic, and this could be an opportunity to funnel money into green technologies, said Le Quéré.

There’s been an increase in the popularity of e-bikes, a green alternative to getting around cities. (Francois Mori/Associated Press)

She said that one of the key findings of the Nature study was that the biggest drop in emissions during the pandemic, behind the aviation industry, has been in surface transport. This, she said, could be one sector governments could target.

“The biggest reason why the emissions [went] down now is mobility. So we just don’t go anywhere. We don’t use our cars. Governments could say, ‘Well, we’re going to tackle that as we get out of confinement,'” Le Quéré said. That could “include everything from encouraging home-working for those who want to and who can, then developing infrastructure for … walking or cycling.”

While Drummond believes the federal government is likely to invest in methods to reduce emissions, he said it will likely be a long time — perhaps years — before we see stimulus packages aimed at revitalizing the economy, such as specific jobs programs.

In the meantime, he said the government can use other means to reach the 7.6 per cent emissions-reduction goal, such as disincentives — like the carbon tax on things like gasoline and heating fuels — which can be effective in bringing down emissions, particularly when that money is recycled back to people and businesses, as the federal government is doing.

“If you have the right incentives or the right disincentives in place, there can be growth that takes place that is not environmentally damaging,” Drummond said. 

“I would say put a price on it … that’s what it really comes down to.”

Another could be investing in retrofitting buildings to make them more efficient, which would be very labour-intensive and could create more jobs. But Drummond said that would be “second best.”

On the path

Mark Jaccard, a professor of sustainability energy at Simon Fraser University, said transitioning to renewable energy isn’t as costly as some may think it is.

He said it would cost “at most, two years of economic growth spread over a 30-year period.” (In recent years, Canada has experienced annual growth in the 1.5 to 1.9 per cent range.)

Jaccard, who is currently working on the next IPCC report, said that this small sacrifice over an extended period of time is far better than the alternative.

Flood waters breach the Gatineau River and flood the neighbourhood in Gatineau, Que., in May 2017. More extreme weather is one consequence of climate change. (Sean Kilpatrick/CP)

“It’s a slight difference in economic output over a 30-year period in order to prevent the dramatic crashing in your economy because of wildfires, acidified oceans, rising seas, major storms and pandemics that can happen from climate change,” he said.

Drummond agrees, noting that concerns about emissions reductions harming the economy will likely always be around, even if they are without merit.

Canada is already on the right path, he said, and the country can ramp up its efforts to see both economic growth and a notable reduction in emissions.

“It’s not like we’re asking to do something that’s never been done before. We are doing it right now, we’re just not doing it enough,” he said. “If you asked me to move a three-tonne rock, if I can move it an inch, I’m pretty sure I can move it a foot.”

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