College students in China now face a daunting new reality: Their parents’ substantial investments in their education are less likely to translate into decent jobs upon graduation as the unemployment rate for 16- to 24-year-olds in urban areas spikes in the post-COVID era.
The latest unemployment figures — a record 21.3% for the age group in June — have thrown a spotlight on this trend. Behind this number are the dashed dreams, increasing anxieties, readjustments of expectations and altered life paths of potentially millions of young Chinese.
Last week, youth unemployment data for July was supposed to be announced together with other key figures in the country’s monthly economic activities report. But Beijing decided to halt the release of the data, citing “methodological optimization,” further fueling widespread data transparency concerns and heightening worries about the country’s economic slowdown.
“China is at the most difficult time for youth employment since the ‘reform and opening up’ in 1978,” said Lu Feng, a professor at Peking University’s National School of Development.
“The relatively high youth unemployment is not a short-term problem but more likely will be a persisting issue for two to three years to come,” he warned.
Ahead of the decision to halt the release of the data, experts had also sounded an alarm that the released data was likely an underestimate.
Another Peking University professor suggested last month that the true figure might be higher if the millions of people who aren’t engaging in the workforce are counted — the rate would reach up to 46.5% in March, compared with the official figure that month of 19.7%.
In another tricky and inexplicable phenomenon that could bode ill for the ruling Chinese Communist Party (CCP), observers have pointed to the steady level of the country’s overall unemployment rate — 5.3% in July — a figure roughly the same as it was in 2019. But the youth unemployment rate has risen from roughly 12% that year to around 20% this year.
One factor behind the high level of youth unemployment has been the massive imbalance between a surplus of graduates and a faltering economy that has failed to create sufficient openings in the labor market.
In 2023, the graduating class in China swelled to a record high of nearly 11.6 million students, an increase of more than 40% from five years ago. The skyrocketing number of graduates stands in sharp contrast to the country’s shrinking gross domestic product growth rate — which saw a decrease of 3.76% within the same period.
Additionally, Goldman Sachs Intelligence has found that a mismatch between the skill sets graduates learned in college and employers’ needs or available roles has been another contributing factor. The government also acknowledged that a great labor shortage is occurring in low-wage service jobs like housekeeping and blue-collar jobs like manufacturing, which college graduates often shun.
For some fields, regulatory changes and policy shocks have limited job choices once popular with new graduates. In 2021, the government abruptly banned the multibillion-dollar, for-profit private tutoring industry, forcing many businesses to shut down and leaving many graduates unemployed.
The regulatory storm unleashed against the big tech companies in recent years has also led to major layoffs within the sector since last year. But at the same time, research by online recruitment company Zhilian Zhaopin revealed that a quarter of Chinese graduates this year were still looking for employment opportunities in the tech sector, more than double the level of the second-biggest category.
Job preferences by graduates are changing, too, partially due to the pandemic.
A surging number of people have opted for the civil service exams in recent years — aiming for a chance at a low-paid but stable role in China’s bureaucracy. In the 2023 application period, nearly 2.6 million took the exam, vying for more than 37,000 government jobs at the national and provincial levels.
The toxic “996” working culture — 9 a.m. to 9 p.m., six days a week — without overtime pay and paltry leave entitlements, prevails in several of China’s key job sectors, including tech.
This has prompted young workers to leave the rat race and embrace the “lying flat” philosophy, in which they lose hope in their chances of career advancement and do the bare minimum to get by. A trend of so-called full-time children is emerging, too, with some young people choosing to continue their duties as “professional” children — doing grocery shopping, housekeeping and other chores for the family in exchange for money or housing from their parents.
Acknowledging the unemployment problem, the government is taking action to promote employment for graduates. In one example, up to 1 million internship opportunities will be created in the public sector, while the Chinese military has prioritized hiring college graduates.
Chinese leader Xi Jinping also weighed in by urging new graduates to learn to “eat bitterness” — a reference to the colloquial Chinese for stoically enduring difficulties — at a young age.
The growing unemployment problem has proven extremely alarming for the CCP, with any failure to address or mitigate their hardships having the potential to boil over into bigger — and more dangerous — discontent against the party, experts said.
In November, frustration and grievances among Chinese youth over the country’s strict “zero-COVID” policy led to social unrest and open calls for a change in governance and politics, a rare public challenge to the party and Xi’s grip on power.
“The CCP is well aware of the consequences of unemployed youth turning disillusioned with the party and ultimately turning angry,” said Jason Hsu of Rayliant Global Advisors.
Some scholars in China have warned about the risk of a society destabilized by an emerging class of “new poor,” a term often used to refer to young people who forgo traditional steady careers, unwilling to join the labor workforce.
“As the ‘new poor’ have long been living in exclusion, oblivion and boredom, their overall mental states have become irritable, antisocial and violent,” Sun Feng, a Tsinghua University sociologist, wrote on a prominent party website last month.
This could be a primary factor in upsetting social stability, she added, which is one of the core values that the CCP put emphasis on and promotes.
More than ever, policymakers in China are desperately focusing on its post-COVID economic recovery, while experts have noted that persistent youth unemployment can have detrimental long-term macroeconomic effects, especially for China.
To support an economy with an expanding elderly population, fresh influxes of highly productive employees are desperately needed.
“Chinese firms and households will remain cautious until Beijing unleashes (a) massive stimulus package signaling that President Xi is (as) equally committed to economic growth as his predecessors,” Rayliant Global’s Hsu said.
“After all, common prosperity will not happen if people with money won't consume, thus creating jobs for the have-nots.”
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.