China Decode: China Drops Its Jobs Target, Tencent Buys Back Manus, and the Rise of "Tier 3 City" Living

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**James Kynge** (1:15)
The number of people now in China in flexible employment is about 320 million workers this year. So this accounts for about 44 percent of China's workforce. That sounds to me like a very lopsided, very imbalanced economy that potentially could engender social stability issues.

**Alice Han** (1:46)
Welcome to China Decode. I'm Alice Han.

**James Kynge** (1:48)
And I'm James Kynge.

**Alice Han** (1:50)
In today's episode of China Decode, we're discussing economic indicators from unemployment to inflation raising flags, Tencent could buy Manus back from Meta, and why Gen Z is moving to smaller cities across China looking for a different lifestyle. That's all coming up, but first, let's do a quick check in with how the Chinese markets are starting the week. Markets were down with the Shanghai composite falling around 2.06 percent, and Shenzhen component dropping 3.48 percent, partially attributed to risk-off sentiment surrounding escalating US-Iran tensions. The Hang Seng index was up slightly at 0.16 percent. All right, let's get right into it. We'll start with the broader economic situation in China right now, as it's facing a bit of an uphill battle. China's Ministry of Human Resources and Social Security released its 15th five-year plan just a few days ago, and for the first time in decades, it didn't set a numerical target for urban job creation over the next five years. This marks the first time since at least the 1990s that a headline number for new urban jobs has been left out of the country's medium-term economic plan. It's being blamed in part on the uncertainty being created by the AI boom in China. The official target for new urban jobs over the past five years was just over 55 million. That's slightly higher than the target that was set in the late 1990s at about 40 million. But it's fitting given that this is a country that really is driven by targets, economic, social, and political targets. So the fact that we have had this change to the way that they think about the urban employment market, i.e. basically getting rid of this target, suggests I think a lot of what we've discussed previously, which is uncertainty about the job market, uncertainty about demographics, uncertainty about how AI could displace a lot of the jobs, especially the gig economy jobs, but not just gig economy, also increasingly white-collar jobs as we've seen elsewhere in the West.
I think that in general, we're starting to see a public consternation globally about the AI implications for the labor force. The way that it manifests in China is quite interesting to me because in the one hand, you have the government trying to proactively set up guardrails, whether it's through the court rulings or through some of the policy statements they made recently about how companies should not be displacing jobs in the grounds of AI disruption.
But on the flip side, you still see, I think, in general, a lot more enthusiasm for AI by the general public compared to, say, America and Europe. How do you see this decision to take away the target, and do you agree with my intuition that it has a lot to do with uncertainty about how AI is going to pan out for the labor market?

**James Kynge** (4:55)
Absolutely agree, Alice, and I think it's a really important topic. I'm really glad that we're focusing on this one today. I would say that if there's one area in which the wheels might come off China's extraordinary economic advances over the past few decades, it has to be employment.