China's newly announced plan to boost employment and entrepreneurship is positive for its sovereign credit, global rating agency Moody's Investors Service said Thursday.
The State Council, China's cabinet, rolled out four measures last Friday encouraging innovation and job creation. The measures were included in the guidelines on employment and entrepreneurship, urging the implementation of proactive employment policies.
These measures will support consumption and social stability, while fostering the private sector as the driver of economic growth, Moody's said in a report.
The announcement comes a day after China reiterated its willingness to apply targeted moves to avoid a sharp slowdown in growth that would weigh on jobs, the report said.
Attention should be paid to the slowdown, targeted adjustment measures should be stepped up, and pre-tuning and fine-tuning policies should be applied to ensure growth stays within a proper range, said a statement released last Thursday after a meeting of the Political Bureau of the Communist Party of China Central Committee.
Dragged down by a sluggish property sector, softening domestic demand and unsteady exports, the Chinese economy grew 7 percent year on year in the first quarter, down from 7.3 percent in the previous quarter.
"Since China's GDP growth began decelerating in 2009, the increase in employment has remained robust. At the National People's Congress in March, the government maintained last year's urban job creation target of about 10 million, following the generation of 13.2 million new positions in China's cities in 2014," said Moody's.
"Taken together, the latest statements highlight the government's determination to sustain robust job creation, while guiding economic expansion down to a moderately strong but more sustainable pace," noted the report.
The policy stance is consistent with steady gearing down in the economy's heavy dependence on credit growth, which poses systemic risks if not reined in, said Moody's, adding that an abrupt collapse in economic expansion will increase strains on the government's balance sheet.