Unprecedented Unemployment Challenges Loom for China’s Gen Z Graduates

**China’s Youth Unemployment Crisis: A Looming Challenge Post-COVID**

**China’s Youth Unemployment Crisis: Rising Rates and Economic Struggles**

In April, Chinese government data revealed that one in five young workers between the ages of 16 and 24 were unemployed, marking a record high. The following month, unemployment rates worsened as an additional 11.6 million college graduates faced a dearth of job opportunities in a stumbling economy. Although China’s Generation Z shares similarities with their American counterparts, their economic prospects are considerably dimmer. As the economic data from the world’s second-largest economy paints a grim picture, key indicators such as manufacturing, retail sales, exports, and investment are not meeting the sky-high expectations that followed the country’s reopening from COVID-zero. In May, exports took a surprise plunge, resulting in decreased trade compared to the same period the previous year. Of particular concern is the surge in youth unemployment rates, despite the overall unemployment rate remaining steady. While urban unemployment stood at 5.2% in May, youth unemployment was a staggering four times higher at 20.8%. The demanding work culture in China, especially within the tech sector, has contributed to this problem, leading some young Chinese workers to leave professional careers and opt for lower-paying manual labor to escape the rigor of the country’s tough offices.

**President Xi Jinping’s Plea vs. Chinese Youth Culture: A Moonlight Clan**

To combat the growing youth unemployment rate, President Xi Jinping has encouraged young workers to adopt a patriotic work ethic and embrace the idea of “eating bitterness” to succeed. However, Chinese youth culture tells a different story. The phenomenon of the “moonlight clan” has emerged, consisting of young people who use their paychecks to indulge in small luxuries instead of saving for an unattainable standard of living. Social media-savvy Chinese youth have invented terms such as “lying flat” and “white people food,” reflecting their discontent with everyday work life and rejecting societal norms. Images of graduates throwing away their degrees or appearing in front of burning buildings flood the country’s social media platforms, as disillusioned young workers mock the value of their higher education. Employers, too, seem reluctant to hire qualified graduates due to concerns that university students have not acquired critical skills and work experience during China’s extended COVID-zero lockdowns.

**Factors Contributing to China’s Youth Unemployment**

The immediate cause of China’s worsening youth employment situation is its sluggish post-COVID economic recovery. Soft consumer demand and a weak labor market have discouraged corporations from hiring, leading to reduced spending by consumers. China’s capital-intensive model of development has also hindered youth employment, exacerbating the problem. Skill mismatch and an overall weak employment growth have dimmed the prospects for Chinese youth. The nation’s transition towards a less manufacturing-intensive economy and the government’s efforts to reduce employment in bloated state-owned enterprises have further impacted employment opportunities for the younger generation. China’s youth unemployment can be divided into two categories: the less educated, who typically work in manufacturing or construction, and the more educated individuals who would traditionally aim for positions in prominent tech companies or the gig economy. However, even these options have become less viable in recent years as hiring has slowed. To address this issue, local governments have proposed various employment solutions, such as offering jobs in rural areas or facilitating job placements in state-owned enterprises, government departments, and rural projects. The national government has also introduced a 15-point plan to boost youth employment, including subsidies for small- and medium-sized enterprises to hire college graduates, support for aspiring entrepreneurs, and encouragement for state-owned enterprises to hire young professionals.

**Economic Recovery Challenges and Long-Term Growth**

Chinese officials acknowledge that the country’s economic recovery is losing momentum. Families are wary of investing in new homes due to the ongoing property bust, businesses are hesitant to make investments, and consumer spending is slowing down after an initial surge following the COVID-zero period. Several major banks, including Barclays, Goldman Sachs, UBS, and Nomura, have adjusted their full-year GDP forecasts for China, lowering expectations. In response, China’s central bank has cut a short-term interest rate, indicating policymakers’ belief that further stimulus is necessary. Additional measures expected to be implemented include continued interest rate cuts, tax breaks for consumers, and increased funding for infrastructure projects. However, it is important to recognize that even if Beijing successfully reignites the economic recovery, China’s future growth will not match the rapid pace of the 2000s and 2010s. Prior to the COVID-19 pandemic, China’s GDP growth had already been slowing, reaching 6.0% in 2019 compared to 9.4% a decade earlier. Economists anticipate that China will settle at a GDP growth rate between 4% and 5% in the coming years. This moderation in growth poses a challenge for youth employment as a slowing economy means a decrease in skilled job opportunities for millions of new graduates. Experts warn that unemployment could become a pervasive social problem, with one in every four or five households having at least one unemployed member. To revive both GDP growth and youth employment, Beijing will need to rely on the private sector, shifting away from heavy regulation and state-owned enterprises, which have been the focus under President Xi’s leadership. Rather, productivity growth will play a crucial role, especially in light of a shrinking labor force and the inefficiency and financial risks associated with public investment.

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