How China was rocked by the youth unemployment crisis

In recent years, China has been facing a significant crisis regarding youth unemployment. Although the ongoing global economic challenges due to the pandemic are often cited as the main cause, they are not the only causes of this problem. The long-term impact of various government policies is now becoming apparent in the country's economic framework. In addition, demographic factors have further exacerbated this economic dilemma. The youth demographic, which makes up a significant portion of the unproductive workforce, has recently attracted media attention due to the difficult circumstances and their peculiar methods of dealing with these difficulties.

According to the latest census data from 2022, China's working-age population, consisting of people aged 16 to 59, accounts for about 62.3 percent of the total population. The youth demographic, defined as people between the ages of 14 and 35, represents a significant portion of the country's population at 28.4 percent. In addition, about 11.48 percent of the youth population falls into the 16-24 working-age group.

Youth unemployment in China's cities reached a record high of 21.3 percent in June last year, a trend that has been steadily rising since 2022. This alarming situation prompted Chinese authorities to temporarily stop releasing official data on youth unemployment. However, the government later released the data, which was believed to have been manipulated to present an apparent improvement in the situation as of December 2023.

The Hukou system, a population registration system implemented in China since 1958, has contributed significantly to the country's current youth unemployment crisis. By dividing citizens into urban and rural categories and restricting rural Hukou holders' access to urban areas, the system has limited their employment opportunities and relegated them to low-paying jobs in their hometowns. This challenge has been exacerbated by China's long-standing one-child policy, which has left many young people to assume sole responsibility for caring for their families.

Over time, the hukou system has widened income disparities between urban and rural workers, despite reforms introduced in 2022 to promote urbanization and economic growth. The system's continued influence has perpetuated a cycle of inequality, with rural hukou holders having limited prospects for social advancement and urban residents enjoying greater access to public services and employment opportunities.

The current economic downturn in China can be directly linked to the government's strict zero-Covid policy. This approach has disrupted economic activities at home and abroad, resulting in fewer job opportunities in the market. China's struggle to achieve economic recovery in the post-pandemic era has pushed the country even deeper into deflation, which is in sharp contrast to the inflationary trends seen globally.

In 2022, the country's GDP growth fell to just three percent year-on-year, reaching its lowest level. Although GDP growth reached 4.7 percent in the second quarter of the current fiscal year, it fell short of the government's target of five percent. Consequently, China faces challenges in achieving its annual GDP growth targets. In addition, both Chinese exports and foreign direct investment declined for the first time this year, which is expected to negatively impact China's important role in the global supply chain.

The ongoing economic downturn in China is having a disproportionate impact on the service sector, particularly white-collar jobs, which are now facing major challenges, as evidenced by Beijing's announcement to reduce headcount by 5 percent, leading to thousands of layoffs among working youth. These mass layoffs are likely to have a significant impact on this year's 11.79 million college graduates, as urban youth unemployment reached 17.1 percent in July. This has led to the “ant tribe” phenomenon, where China's educated young people settle for low-paying jobs that are below their academic qualifications or do not match their degrees, not only hurting their career prospects but also impacting the country's economic growth.

Upgrading skills is critical to improving economic performance. It creates a mismatch between the supply of high-skilled workers and the demand for skilled jobs, which in turn puts downward pressure on wages and increases competition for the few jobs that exist. The Chinese government should address this problem by promoting sustainable economic growth, supporting small and medium-sized enterprises, encouraging innovation and creating an environment conducive to job creation, because tackling youth unemployment is critical to the well-being of young people and China's long-term economic prosperity.

In addition to the economic crisis, China is facing a significant demographic challenge. The latest census shows a rapid decline in the working-age population, while the number of elderly people continues to rise steadily. This demographic problem is primarily a consequence of the long-standing one-child policy, which, despite its official abolition in 2016, has not led to an improvement in the country's demographic situation.

The total fertility rate remains alarmingly low at 1.09, well below the 2.1 needed for a stable population. In 2022, China recorded its lowest population growth in six decades, a trend that continued into the following year. This demographic shift puts additional pressure on young people, who are increasingly expected to take on the role of caregivers for their families amid a weakening economy and rising unemployment.

China's infamous “996” work culture, which requires workers to work from 9 a.m. to 9 p.m. six days a week, has placed a heavy burden on the country's young workforce, leading to widespread overwork and inadequate pay. Despite President Xi Jinping's call to prioritize job creation for college graduates, the general attitude toward work culture remains strict and inhumane. As officials try to tackle the youth unemployment crisis, young people, especially recent college graduates, are being advised to be less selective in their job search. Echoing the views of the Cultural Revolution, educated young people today are encouraged to move to rural areas to do manual labor that is in stark contrast to their academic qualifications, and are also advised to learn to endure hardship. However, Chinese youth are finding unique ways to cope with unemployment and deviating from the prescribed path.

In 2021, the “Tang Ping” or “lying flat” trend emerged among Chinese youth in response to the “996” work culture, rising unemployment, and the housing crisis. Young people are now embracing their unemployment and forgoing marriage and family plans, which many see as a silent resistance to China's hyper-competitive work ethic.

In the past year, another trend has emerged among Chinese youth in response to burnout, layoffs, and unemployment: they are becoming “full-time children.” These youth are returning to their families and devoting their time to caring for their parents. Instead of searching for work in the labor market, these full-time children are now being paid by their parents to perform their caregiving duties. In other words, Chinese youth are finding ways to cope with their unemployment and defy government pressure, rather than succumbing to the economic hardships resulting from flawed Chinese policies.

The author is an author and columnist and has written several books. His X-handle is @ArunAnandLive. The views expressed in the above article are personal and solely those of the author. They do not necessarily reflect the views of News18.