The global economic slowdown is taking its toll in Asia, which has also proved it is not immune to financial scandal. Premier Wen Jiabao of China promised action on jobs, as profits fell on Macau casinos and Louis Vuitton sought to entice wealthy Asian shoppers with unique luxury goods. And in South Korea, four banks were being investigated on charges that they rigged interest rates on CDs.
Reuters reported China’s leader saying Wednesday, “Currently and in the future, China’s employment situation will become more complex and more severe. The task of promoting full employment will be very heavy and we must make greater efforts to achieve it.”
The possibility of job cuts looms as small and midsized exporters face up to falling demand around the world. Fewer exports translate to fewer jobs, and China fears that growing unemployment will lead to social unrest—something Beijing wants to avoid, particularly since it is about to change leadership for the first time in 10 years.
With second-quarter economic growth slowing to 7.6%—barely above the government’s 7.5% target for the whole year—the quarter is the weakest since Q1 2009, when 20 million jobs disappeared in just a few months as the economic crisis took hold.
In his remarks, which came after a Tuesday parliamentary meeting, Wen said, “We need to maintain steady and relatively fast economic growth to help create jobs.” The meeting found that the country’s economic growth is not dependable and that funds must be invested to boost growth even as waste is cut.
Wen directed governmental offices at all levels to put job creation at the top of their priorities in the creation of economic plans. He also said they should create more jobs as urbanization and economic restructuring are carried out.
Even the wealthy in Asia are apparently feeling the pinch as Bloomberg reported that high-stakes gamers cut their losses in Macau casinos. Revenues for June in the “Monte Carlo of the Orient” came in at 12%, according to the Gaming Inspection and Coordination Bureau, lower than the 15% predicted in an analyst survey.
That, combined with lower revenues in Nevada, caused Steve Wynn’s Wynn Resorts to miss analyst estimates for Q2 results. In a Tuesday conference call, Wynn said that casino operators have boosted discounts against slower growth in the Chinese gambling market. He was quoted saying, “Competition has made everyone sharpen their knives.”