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Consumer inflation expectations focused on food, transportation prices, BSP finds

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FOOD and transport prices will be driving consumer inflation expectations, according to a Bangko Sentral ng Pilipinas (BSP) discussion paper.

“Empirical findings suggest that consumers’ inflation expectations are shaped by price changes in salient commodity groups such as food, beverages, and transport,” according to the paper, ‘Dissecting Consumer Attention: Insights on Consumers’ Inflation Expectations in the Philippines.’

It said that inflation expectations of households are crucial in understanding inflation dynamics. These also have implications on economic behavior and spending patterns.

“Salience of price changes over the past year appears to align closely with the size of actual expenditure shares, although housing, while a large expenditure, does not receive proportionate public attention,” it said.

“Among food items, consumers appear to pay closer attention to rice, sugar, fish, vegetables, and fruit,” it added.

The Philippines has been facing elevated inflation since 2022 amid supply chain disruptions and other external headwinds.

Since 2022, annual inflation has breached the BSP’s 2-4% target range. The central bank expects inflation to settle at 3.4% this year.

The discussion paper also found that low-income consumers are more focused on food and rice prices as against higher-income classes.

Meanwhile, consumer expectations were also found to be bad predictors of actual conditions.

“Compared to professional forecasters and firms, households’ mean inflation expectations register higher forecast errors. Consumers also offer more dispersed assessments of its future direction,” it said.

“While households tend to forecast with lower mean accuracy, higher moments of the distribution of their expectations can shed light on the anchoring of inflation and signal shifting expectations among segments of the population,” it added.

According to the latest consumer expectations survey of the BSP, more consumers are pessimistic amid expectations of rapid increase in the prices of goods and higher household expenses, lower incomes, and fewer available jobs.

“While households’ mean inflation expectations lagged rising inflation, the underlying distribution showed wider variability and negative skewness, suggesting a possible weakening of the inflation anchor and upward drift in expectations,” the BSP paper said.

“Households’ mean inflation point forecasts were also found to persist despite substantially increasing news coverage on the elevated inflation. However, disagreement appears to generally track inflation mentions in the news,” it added. — Luisa Maria Jacinta C. Jocson

Revisiting the tax compliance requirements of online sellers

The Bureau of Internal Revenue (BIR) has increasingly underscored the importance of ensuring that all persons conducting business, particularly through digital platforms, are properly registered and tax compliant.

With the highly anticipated “9.9” sale approaching, online sellers are preparing for a surge in activity, offering various discounts and promotions to attract customers. However, amidst the excitement and potential for increased sales, it is crucial for online sellers to ensure that their business operations are in compliance with regulatory requirements, particularly concerning their tax obligations.

As a helpful reminder, here’s a review of key BIR issuances and the timeline concerning tax compliance of online sellers. Understanding these requirements will help ensure that their businesses remain compliant and avoid any potential issues.

REVENUE MEMORANDUM CIRCULAR (RMC) NO. 55-2013
In 2013, the BIR reminded parties engaged in online business transactions, such as online shopping or retailing, intermediary services, advertisements, and auctions, that they are subject to the same tax obligations as any other business establishment. Online entities must register with the BIR, issue registered invoices or receipts (simplified now to “invoices” under the Ease of Paying Taxes Act), maintain books of account, withhold taxes as required, file returns, and pay the correct taxes on time.

RMC NO. 60-2020
As the pandemic accelerated the shift of business owners to online selling, in June 2020, the BIR issued a circular clarifying that tax obligations apply not only to sellers but also to other parties of online business transactions, such as payment gateways, delivery services, internet service providers, and other facilitators. It allowed online business owners to register and/or update their registration with the BIR by July 31, 2020, without facing any penalties for late registration, thus providing a window of opportunity for compliance amid a rapidly changing business landscape.

REVENUE REGULATION (RR) NO. 16-2023 CLARIFIED BY RMC NO. 8-2024
In late 2023, BIR issued a regulation that imposes a 1% withholding tax on the gross remittance of electronic marketplace operators (e-market operators) and digital financial services providers (DFSPs) to online sellers. RR No. 16-2023, which was clarified under RMC No. 8-2024, highlighted also that while e-market operators and DFSPs are the responsible parties to withhold, online sellers are not without any obligation at all.

At the onset, online sellers must ensure that their business is registered with the BIR. One of the requirements to use the e-marketplace facility is to submit a copy of the BIR-issued Certificate of Registration (CoR) to the e-market operators. Also, in case online sellers are exempt from tax or subject to a lower tax rate, they are obliged to submit a duly issued certification to the e-marketplace operator as proof of exemption or entitlement to a lower rate.  

RR NO. 15-2024
In August, the BIR issued more regulations that prescribes the policies and guidelines on the tax obligation of all persons engaged in business, including those with physical stores (called brick-and-mortar stores) and those solely operating online stores, to register their business pursuant to Section 236(A) of the Tax Code, as amended.

Particularly, the regulations provide the following guidelines:

a. Persons engaged in the sale and/or lease of goods and services through physical stores must register at the BIR district office having jurisdiction over the place of business address, including that of its branch and/or facility;

b. Persons operating online stores for their physical store must register its store name as an additional “business name;” and

c. Persons engaged in the sale and/or lease of goods and services through a website, webpage, page, platform, or application who do not have a physical store must register at the BIR district office having jurisdiction over the place of residence for individuals or the principal place of business for juridical entities.

Registration must be done, either electronically or manually, on or before the commencement of business, before payment of any tax due, or upon filing of a return, statement, or declaration as required under the Tax Code, as amended.

It is important to note that all persons, natural or juridical, engaged in trade or business in the Philippines are required to register with the BIR, specifically those selling and/or leasing goods and services through brick-and-mortar stores, e-commerce, or online businesses, including those selling virtual items in online games, operating and selling through digital platforms, creating and streaming digital content from which income is generated, the e-retailing of goods and services, the sale of services over the internet, and other forms of business conducted online.

After registration, online businesses must post their BIR-issued CoR or Electronic CoR at the place where business is conducted for those with physical stores and at the place of residence for those solely operating online stores, in a way that is clearly and easily visible to the public. Additionally, persons operating businesses through online stores must display conspicuously the electronic copy of the BIR-issued CoR on their website, webpage, account, page, platform, or application. It must be, at all times, easily accessible and visible to buyers or customers visiting the seller or lessor’s webpage, account, page, platform, or application.

To avoid penalties during BIR’s tax compliance verification drive (commonly known as tax mapping), online sellers must comply with this posting requirement. While it may appear simple, it has become one of the most frequently overlooked compliance obligations.

Any person violating the registration requirements is administratively and criminally liable for penalties and fines. The business operations of the violator may be suspended through the issuance of a Closure/Take Down Order by the BIR. The regulations also noted that any person who willfully aids or abets the commission of the violation or who causes the commission of any such violation will be liable in the same manner as the principal violator. This may include lessors, sub-lessors or commercial establishments/buildings/space, and operators of digital platforms, including e-marketplace platforms, who fail to ensure that their respective lessees and online sellers are duly registered with the BIR and are compliant with the tax rules. The list of violations and the corresponding penalties are summarized in the regulations.

TAKEAWAYS
The BIR’s issuances over the years, as highlighted above, show a continuous and progressive refinement of registration requirements for online sellers, reflecting the government’s recognition of the increasing significance of digital commerce in our economy. As technology continues to advance, it is essential for government policies to evolve accordingly, ensuring that compliance requirements and regulations effectively meet the demands of the ever-changing digital landscape and safeguard the interests of all stakeholders — sellers, buyers, and the government.

Further, given the significant role that online sellers play in driving the economy, it is essential for them to fulfill their tax obligations. Just like traditional businesses, online sellers benefit from public infrastructure, services, and a stable economic environment. Thus, they must contribute their fair share of taxes to support these systems. This responsibility is vital for ensuring fairness and sustaining the programs that enable both online and offline businesses to thrive.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Tonee Rose M. Palomeno is a manager of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

PHL’s Frayna, Canino earn rating points before Olympiad campaign

RUELLE CANINO

THE PHILIPPINES’ Janelle Mae Frayna and Ruelle Canino continued to earn both rating points and confidence they would need before wading into competition in the FIDE World Chess Olympiad slated Sept. 10 to 22 in Budapest, Hungary.

Ms. Frayna, the country’s only Woman Grandmaster (GM), finished just 34th out of 150 participants but her unbeaten output of 6.5 points out of the possible 10 and the rating points she gained from it spoke highly of how prepared she is for the Budapest tilt.

The enlisted Army woman never relinquished a single loss with three wins, including a gigantic shocker over Hungarian Grandmaster Gabor Papp — rated 2550 — and seven draws propelled her rating to 2268 from 2162 before he plunged into the European tour.

More impressive was the 16-year-old Ms. Canino, who ended up with six points in the Barcelona meet and earned a colossal 160.8 rating points to zoom to 2164.8 from 1908 that impressed Ms. Frayna, who has been tutoring the former as of late.

“With this current form and performance, soon enough, she can reach 2300 before the year ends, or who knows, maybe even after the Olympiad,” said Ms. Frayna of the Woman FIDE Master from Cagayan de Oro. Mmsse. Frayna and Canino, whose trip was supported by the Philippine Sports Commission and the National Chess Federation of the Philippines (NCFP) will spearhead the country’s women’s team participating in the Olympiad set in the Hungarian capital. Jan Jodilyn Fronda, who was also in Europe but had to go home to fix visa issues, Bernadette Galas and Shania Mae Mendoza are the other members of the squad with GM Jayson Gonzales as coach.

GMs Inno Sadorra and John Paul Gomez and IMs Daniel Quizon, Jem Garcia and Paolo Bersamina comprise the men’s side mentored by GM Eugene Torre with NCFP board member Roel Canobas is head of the delegation. — Joey Villar

NLEX Road Warriors facing scrambling Barangay Ginebra following duel of Blackwater and Phoenix

NLEX ROAD WARRIORS — PBA.PH

Games Tuesday
(Smart-Araneta Coliseum)
5 p.m. — Blackwater vs Phoenix
7:30 p.m. — NLEX vs Ginebra

THREE struggling teams grasp for air while one wants no let-up among the league-leaders as the PBA Governors’ Cup reaches the crucial halfway mark of the elimination round Tuesday at the Smart-Araneta Coliseum.

Running second with an impressive 3-1 slate, NLEX takes on the formidable but suddenly scrambling Barangay Ginebra (1-2) in the main game at 7:30 p.m. following the duel between Blackwater (1-3) and Phoenix (0-3) at 5 p.m. of an all-Group B pairing.

NLEX, under the watch of returning mentor Jong Uichico, gained a quick redemption last Saturday in Cagayan De Oro with a 112-108 overtime win over San Miguel — on the heels of its lone loss against unbeaten and Group B leader Rain or Shine (4-0).

With an intact roster led by top gun Robert Bolick and reinforced by import Myke Henry, the Road Warriors should be the favorites to get the better of the Gin Kings still learning the ropes after a bevy of offseason moves.

Ginebra’s transition phase, with No. 3 rookie RJ Abarrientos along with new guys Isaac Go and Stephen Holt following a trade that sent veterans Christian Standhardinger and Stanley Pringle to Terrafirma, has been evident so far with a rare, slow start.

The wards of coach Tim Cone, even with the presence of resident import and Gilas Pilipinas naturalized Justin Brownlee, fell prey to Rain or Shine, 73-64, and previously winless Blackwater, 95-88, so far. Ginebra’s lone win came against San Miguel, 108-102 for a bumpy campaign so far.

Still, the Gin Kings have the experience and capability to show up any day against any squad and there’s no better timing to do that against the in-form NLEX to stabilize their track.

The spotlight, however, is not only on the NLEX-Ginebra tiff with Blackwater looking to ride on the crest of its massive upset axe on Ginebra despite parading a new import in George King in lieu of Ricky Ledo.

With timely help from second overall pick Sedrick Barefield highlighted by his four-point dagger, Mr. King lived up to his billing by pouring in 33 points and 19 rebounds in a 95-88 win for Blackwater, which lost two straight with Mr. Ledo before fielding an All-Filipino unit against San Miguel.

“It’s so far so good. That’s how optimistic we are. I’m very confident we can sustain this. I think the guys are learning how to play with each other even more,” said tactician Jeff Cariaso as the Bossing want no less than a quick follow-up against the winless but hungry Fuel Masters.

“The tenacity and the mindset we had against Ginebra is something we can build on. That’s the first step but with six games remaining, our backs are still against the wall. We gotta make things happen and get ready for Phoenix.”

A semifinalist in the last Philippine Cup, Phoenix for its part is on a free fall after bowing to San Miguel, 111-107, NLEX, 100-95, and the undefeated Rain or Shine, 116-96. The Fuel Masters will parade new import Brandone Francis, a replacement to overheight Le’Bryan Nash who took the place of original reinforcement Jayveous Mckinnis. — John Bryan Ulanday

PVL junks PLDT protest; Farm Fresh named to PVL Invitational Conference

PLDT HIGH SPEED HITTERS — PVL

“CONTINUE to fight.”

The PLDT High Speed Hitters made this solemn vow after their protest concerning the no-fault on the net touch challenged that happened late in their semifinal loss to Akari at the Mall of Asia Arena Thursday was junked by the Premier Volleyball League (PVL) late Sunday night.

“The High Speed Hitters are in the business of inspiring the next generation of athletes who will one day play in the big leagues,” said the team through its social media handles.

“So the kids watching all this unfold, whatever adversity that comes along the way, please continue to fight. Because we will,” it added.

PVL President Ricky Palou bared the news but did not elaborate.

“Commissioner turned down the protest of PLDT. The Finals will push through,” said Mr. Palou referring to league commissioner Sherwin Malonzo.

Mr. Malonzo had actually explained even before PLDT lodged its protest that the league abided by the FIVB Rule 11.3.2, which allows players to touch the net as long as it doesn’t interfere with the play.

In the same social media post, PLDT stressed it remained astonished as to why the issue had happened.

“We are yet to know what this horrible experience is trying to teach us but one thing PLDT is proud of as a team is how we are one in fighting for the integrity not just of our team but the entire of Philippine volleyball,” it said.

The High Speed Hitters also thanked their supporters who sympathized with them.

“And we cannot thank enough the fans who fought for us and with us. Your love for our favorite sport is undeniable,” it added.

Meanwhile, the PVL announced Farm Fresh would fill in for PLDT in the PVL Invitationals set to unfurl right after the one-game PVL Reinforced Conference finals between Creamline and Akari Wednesday at the Smart Araneta Coliseum.

PLDT clarified its withdrawal was done as early as last week and wasn’t related to the controversial protest.

Also participating in the conference are Creamline, Akari and Cignal plus two foreign teams including defending champion Kurashiki Ablaze of Japan. — Joey Villar

Seven Olympians receive special edition adidas shoes

CARLOS YULO

FILIPINO Olympic medalists Carlos Yulo, Nesthy Petecio and Aira Villegas were given a special, one-of-a-kind edition of adidas’ Stan Smith Shoes that bore their faces.

The troika received this memento from adidas during yesterday’s intimate media briefer at the adidas Home of Sport Two Parkade in Bonifacio Global City in Taguig for their extraordinary performance in the Paris Games a month ago.

The priceless and unique gift was the latest bonus Mr. Yulo has received, which has now breached the P100-million mark.

Apart from the three, Olympians Sam Catantan, Joanie Delgaco, Elreen Ando and Eumir Marcial also received their own Stan Smith shoes with their own faces on it.

All seven were adidas ambassadors. — Joey Villar

Defending champion Coco Gauff makes early exit from US Open; Alexander Zverev into last eight

NEW YORK — Coco Gauff’s US Open title defense ended in a 6-3 4-6 6-3 loss to fellow American Emma Navarro in the fourth round on Sunday, the reigning women’s champion becoming the latest big name to make an early exit at Flushing Meadows this year.

Ms. Gauff had been looking to avenge her fourth-round loss at this year’s Wimbledon but Ms. Navarro stunned the crowd at Arthur Ashe Stadium with an aggressive all-round display to reach the quarterfinals for the first time.

Third seed Ms. Gauff fought her way back into the match after going a set down but ultimately 19 doubles faults and 60 unforced errors meant her first defense of a Grand Slam title was destined to end in disappointment. “Mentally and emotionally, I gave it my all,” said 20-year-old Ms. Gauff, who will now drop out of the top five in the world rankings. “Of course, there were things execution-wise, obviously I wish I could serve better. I think if I would have did that, it would have been a different story for me. But Emma played really well. She did everything well, I thought.”

In men’s action, Alexander Zverev, Grigor Dimitrov, Taylor Fritz and Frances Tiafoe all marched into the quarterfinals in the bottom half of the draw which was left wide open after the third-round exit of four-times champion Novak Djokovic.

Mr. Zverev, still searching for his first Grand Slam title at the age of 27, reached the quarterfinals at a major for the 13th time after coming from a set down to beat American Brandon Nakashima 3-6 6-1 6-2 6-2.

The fourth seed will next face another American in Mr. Fritz, who overcame a sluggish start to beat Norwegian Casper Ruud, the losing finalist in 2022, 3-6 6-4 6-3 6-2.

HOMEGROWN CHAMPION
Mr. Fritz was later joined in the quarterfinals by Mr. Tiafoe, another player hoping to take advantage of the early exits of Mr. Djokovic and Carlos Alcaraz to end America’s 21-year wait for a homegrown men’s champion.

Alexei Popyrin ousted Mr. Djokovic in a huge shock on Friday but was unable to progress any further as Mr. Tiafoe, roared on by a noisy evening crowd on Arthur Ashe, ran out a 6-4 7-6(3) 2-6 6-3 winner.

It was not all plain-sailing for the 20th seeded American, who had to dig deep to battle back from 5-2 down in the second set against the big-serving Australian.

Mr. Tiafoe, though, broke for 4-2 in the fourth on a Popyrin double fault and held firm to set up a quarterfinal against Mr. Dimitrov, who was earlier cheered on by Serena Williams as he downed sixth seed Andrey Rublev 6-3 7-6(3) 1-6 3-6 6-3.

Women’s second seed Aryna Sabalenka, the runner-up to Ms. Gauff last year, continued her impressive form to move into the last eight with a 6-2 6-4 victory over her former doubles partner Elise Mertens.

The twice Australian Open champion was in imperious form in the first set, rock solid on her booming first serve, coming into the net to great effect, and regularly unleashing her rocket of a forehand.

Belgian Ms. Mertens made things trickier in the second stanza and the Belarusian was forced to save four break points but another 23 winners to take her match tally to 41 saw Ms. Sabalenka safely into the quarterfinals for the fourth straight year.

Ms. Navarro, meanwhile, moves on to play Spain’s Paula Badosa, who thrashed Wang Yafan of China 6-1 6-2 in the first match of the day at Louis Armstrong Stadium to reach the last eight in New York for the first time. — Reuters

Kelsey Mitchell’s season-high 36 points lead Fever over Wings

KELSEY MITCHELL poured in a season-high 36 points that included a key 3-pointer and a pair of free throws in the final minutes as the visiting Indiana Fever came from behind to beat the Dallas Wings 100-93 on Sunday afternoon in a key late-season clash in Arlington, Texas.

Dallas led by a point at halftime and by four points after three quarters in a game in which there were 20 lead changes.

Ms. Mitchell canned a 3-pointer with 1:58 to play to give Indiana a four-point advantage and hit a pair of free throws with 1:15 remaining to push the lead to six.

The Fever (17-16) held on to win their fourth straight game and move above .500 for the first time this season.

Caitlin Clark recorded 28 points and 12 assists for Indiana, marking her 15th game of the season with more than 20 points. NaLyssa Smith added 14 points for the Fever.

Arike Ogunbowale racked up 34 points to lead the Wings (9-23), who had a season-best three-game win streak snapped. Satou Sabally added 25 points, Natasha Howard scored 18 and Teaira McCowan grabbed 11 rebounds for Dallas.

The Wings forged a 9-0 surge midway through the first quarter to leapfrog from a 10-6 deficit to a 15-10 lead, with back-to-back 3-pointers by Ms. Ogunbowale punctuating the run. Indiana rallied to retake the lead at 19-18 after Ms. Clark’s layup, but Ms. Ogunbowale responded with another three, her fifth in the quarter, to help Dallas carry a 23-19 lead after 10 minutes of play. — Reuters

Germany’s Scholz worried by far-right surge in regional polls

A GERMAN national flag flies atop the illuminated Reichstag building in Berlin, Germany Dec. 9, 2022. — REUTERS

BERLIN — German Chancellor Olaf Scholz called the results of two regional elections that saw big wins for the far-right AfD and losses for his coalition “bitter” and urged mainstream parties to form governments without “right-wing extremists.”

The Alternative for Germany (AfD) became the first far-right party to win a state legislature election in Germany since World War II with its result in weekend voting in Thuringia. It came a close second behind the conservatives in Saxony, projections late on Sunday showed.

But the AfD, deemed “right-wing extremist” by security officials in both of the east German states, is unlikely to be able to govern as other parties have so far refused to collaborate with it to form a majority.

Still, the nationalist, anti-migration and Russia-friendly party could end up with enough seats in both states to block decisions requiring a two-thirds majority such as the appointment of judges or top security officials, giving it unprecedented power.

“The results for the AfD in Saxony and Thuringia are worrying,” Mr. Scholz said in a statement to Reuters. He clarified he was talking as a lawmaker for his center-left Social Democrats (SPD).

“Our country cannot and must not get used to this. The AfD is damaging Germany. It is weakening the economy, dividing society and ruining our country’s reputation.”

With a year to go until Germany’s national election, the results on Sunday punished Mr. Scholz’s fractious coalition, which could aggravate infighting.

All three ruling parties lost votes, with only his SPD comfortably clearing the 5% threshold needed to stay in the two states’ parliaments.

Populist leftist newcomer, the Sahra Wagenknecht Alliance (BSW), founded by a former member of the East German Communist Party, did better than all of three coalition partners in its first state elections, coming in third place.

“Sunday’s election results are bitter — for us too,” Mr. Scholz said. But he noted that the more dire predictions, that the SPD might fall out of a state parliament for the first time, had not materialized.

Junior coalition partners the Greens and pro-business Free Democrats both fell out of the Thuringia state assembly.

Sunday’s results could also pressure the government to be tougher on immigration and intensify the debate over support for Ukraine, issues that dominated the campaign. — Reuters

Brazil’s Amazon rainforest fires reach 14-year high

A MEMBER of Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) fire brigade works to extinguish a fire rising in Amazon rainforest in Apui, Amazonas state, Brazil, Aug. 8, 2024. — REUTERS

SAO PAULO — The number of fires in Brazil’s Amazon rainforest region for the month of August surged to the highest level since 2010, government data showed on Sunday, after a record drought that has been plaguing the biome.

Last year’s rains came late and were weaker than usual because a weather pattern, known as El Niño, was supercharged by climate change, leaving the rainforest especially vulnerable to this year’s fires.

Satellites detected 38,266 fire hotspots in the Amazon in August, more than double compared to the previous year and the largest number for that month since 2010, data from Brazil’s National Institute for Space Research (INPE) showed.

The August data reaching a 14-year high comes after last month’s fire hotspots in the region surged to a two-decade high.

While the data is the fastest indicator of the state of fires in the region, which often peak between August and September, it does not indicate the intensity.

Fires in the naturally wet and humid biome often start on cattle ranches where locals are converting the jungle into pastures for cattle ranching.

Warmer air and drier vegetation have created conditions where fires can spread more rapidly as well as burn more intensely and for longer. Deforestation has also reduced the rainforest’s ability to produce rain and humidity.

Helga Correa, a conservation specialist at World Wildlife Fund-Brasil, said in an initial assessment of the August data last week that the fires were driven by a combination of weather, climate change and human actions.

“The region where we detected concentrated smoke in August coincides with the so-called Arch of Deforestation, which includes the north of Rondonia, the south of Amazonas and the southwest of Para,” she said.

“This indicates that, in addition to climate change and El Niño, changes in land use produced by humans play a central role in the increase in fires,” she said. — Reuters

New unproductive forces: The Chinese youth owning their unemployment

REUTERS

BEIJING — After quitting the education industry last August due to China’s crackdown on private tutoring, He Ajun has found an unlikely second life as an unemployment influencer.

The Guangzhou-based vlogger, 32, offers career advice to her 8,400 followers, charting her journey through long-term joblessness. “Unemployed at 31, not a single thing accomplished,” she posted last December.

Ms. He is now making around 5,000 yuan ($700) per month through ads on her vlogs, content editing, private consultations and selling handicrafts at street stalls.

“I think in future freelancing will be normalized,” said Ms. He. “Even if you stay in the workplace, you’ll still need freelancing abilities. I believe it will become a backup skill, like driving.”

China is under instruction to unleash “new productive forces,” with government policies targeting narrow areas of science and technology including artificial intelligence (AI) and robotics.

But critics say that has meant weak demand in other sectors and risks leaving behind a generation of highly educated young people, who missed the last boom and graduated too late to retrain for emerging industries.

A record 11.79 million university graduates this year face unprecedented job scarcity amid widespread layoffs in white-collar sectors including finance, while Tesla, IBM and ByteDance have also cut jobs in recent months.

Urban youth unemployment for the roughly 100 million Chinese aged 16-24 spiked to 17.1% in July, a figure analysts say masks millions of rural unemployed.

China suspended releasing youth jobless data after it reached an all-time high of 21.3% in June 2023, later tweaking criteria to exclude current students.

Over 200 million people are currently working in the gig economy and even that once fast-growing sector has its own overcapacity issues. A dozen Chinese cities have warned of ride-hailing oversaturation this year.

Redundancies have even spread to government work, long considered an “iron rice bowl” of lifetime employment.

Last year Beijing announced a 5% headcount reduction and thousands have been laid off since, according to official announcements and news reports. Henan province trimmed 5,600 jobs earlier this year, while Shandong province has cut nearly 10,000 positions since 2022.

Meanwhile, analysts say China’s 3.9 million vocational college graduates are mostly equipped for low-end manufacturing and service jobs, and reforms announced in 2022 will take years to fix underinvestment in training long regarded as inferior to universities.

China currently faces a shortage of welders, joiners, elderly caregivers and “highly-skilled digital talent,” its human resources minister said in March.

Yao Lu, a sociologist at Columbia University, estimates about 25% of college graduates aged 23-35 are currently in jobs below their academic qualifications.

Many of China’s nearly 48 million university students are likely to have poor starting salaries and contribute relatively little in taxes throughout their lifetimes, said one Chinese economist who asked not to be named because of the sensitivity of the issue.

“Although they cannot be called a ‘lost generation,’ it is a huge waste of human capital,” the person said.

‘DOING THREE PEOPLE’S JOBS’
Chinese President Xi Jinping in May urged officials to make job creation for new graduates a top priority. But for younger workers unemployed or recently fired, the mood is bleak, nine people interviewed by Reuters said.

Anna Wang, 23, quit her state bank job in Shenzhen this year due to high pressure and frequent unpaid overtime. For a salary of about 6,000 yuan per month, “I was doing three people’s jobs,” she said.

Her ex-colleagues complain about widespread pay cuts and transfers to positions with unmanageable workloads, effectively forcing them to resign. Ms. Wang now works part-time jobs as a CV editor and mystery shopper.

At a July briefing for foreign diplomats about an agenda-setting economic meeting, policymakers said they have been quietly urging companies to stop layoffs, one attendee told Reuters.

Olivia Lin, 30, left the civil service in July after widespread bonus cuts and bosses hinted at further redundancies. Four district-level bureaus were dissolved in her city of Shenzhen this year, according to public announcements.

“The general impression was that the current environment isn’t good and fiscal pressure is really high,” she said.

Ms. Lin now wants a tech job. She has had no interview offers after a month of searching. “This is completely different from 2021, when I was guaranteed one job interview a day,” she said.

REDUCED STIGMA
Shut out of the job market and desperate for an outlet, young Chinese are sharing tips for surviving long-term unemployment. The hashtags “unemployed,” “unemployment diary” and “laid off” received a combined 2.1 billion views on the Xiaohongshu platform Ms. He uses.

Users describe mundane daily routines, count down the days since being fired, share awkward chat exchanges with managers or dole out advice, sometimes accompanied by crying selfies.

The increasing visibility of jobless young people “increases broader social acceptance and reduces stigma surrounding unemployment,” said Columbia’s Ms. Lu, allowing otherwise isolated youth to connect and “perhaps even redefine what it means to be unemployed in today’s economic climate.”

Ms. Lu said unemployed graduates understood blaming the government for their plight would be both risky and ineffective. Rather, she said, they were more likely to slip into “an internalization of discontent and blame” or “lying flat.”

Ms. He, the influencer, thinks graduates should lower their ambitions.

“If we have indeed entered ‘garbage time,’ then I think young people could accumulate skills or do something creative, such as selling things via social media or making handicrafts.” — Reuters

South Korea police launch probe into Telegram over online sex crimes, Yonhap reports

DIMA SOLOMIN-UNSPLASH

SEOUL — South Korean police have launched an investigation into the messaging platform Telegram over deepfake online sex crimes, Yonhap news agency reported on Monday, citing a senior police official.

The probe will examine whether it had been abetting distribution of sexually explicit deepfake content, Yonhap said, quoting the head of the National Office of Investigation.

An official at the National Police Agency’s cyber investigation bureau declined to confirm the report when reached by telephone.

South Korean authorities have called on Telegram and other social media platforms for cooperation in fighting sexually explicit deepfake content.

The steps follow reports by several domestic media outlets that sexually explicit deepfake images and videos of South Korean women were often found in Telegram chatrooms.

Telegram could not immediately be reached for comment but the company last week said it actively moderates harmful content on its platform including illegal pornography.

“Moderators use a combination of proactive monitoring of public parts of the platform, sophisticated AI (artificial intelligence) tools and user reports in order to remove millions of pieces of harmful content each day,” it said in a statement. Reuters