1 in 5 of China’s urban youth are unemployed. That’s a huge headache for Xi Jinping
But his situation changed dramatically this summer. Just as Cheri was about to graduate. University this year and started his job, he was told by the company that his offer was rescinded because it had to “adjust” its business and cut staff.
His colleagues also received similar calls.
“I think it’s because of the pandemic,” the 22-year-old said. “Most companies have been affected by the Covid lockdown this year.”
She asked to be known only as Cherry for fear of reprisals from future employers.
“We fresh graduates are definitely the first batch of people to be laid off, because we just joined the company and haven’t contributed much,” Cherry said.
A record 10.76 million college graduates entered the job market this year, at a time when China’s economy is losing its ability to absorb them.
The rate fell slightly to 18.7 percent in August, but was still at an all-time high, data from the Office for National Statistics showed on Friday.
That means about 20 million people between the ages of 16 and 24 are currently out of work in cities and towns, according to CNN calculations based on official statistics that put the urban youth population at 107. Million. Rural unemployment is not included in official statistics.
“This is certainly China’s worst youth job crisis in four decades,” said Willy Lam, a senior fellow at the Jamestown Foundation in Washington, DC.
“Mass unemployment is a major challenge for the Communist Party,” he said, adding that economic growth and job stability were key to the party’s legitimacy.
The freewheeling industry was once the main source of high-paying jobs for young, educated workers in China, but big companies are now downsizing on a scale never seen before.
According to calculations based on CNN financial documents, it is the biggest reduction in staff since Alibaba listed in New York in 2014.
“The importance of cuts to these cutting-edge tech industries cannot be understated,” said Craig Singleton, senior China fellow at the DC-based Foundation for Defense of Democracies.
“These latest cuts represent a double threat for Beijing going forward – not only do thousands of people unexpectedly find themselves out of work, but Chinese tech giants will now have fewer qualified employees to fill these gaps.” will help them to compete with their Western rivals,” Singleton said.
“There’s a saying in business circles that ‘if you’re not growing, you’re dying,’ and that simple truth threatens to undermine China’s broader technological ambitions,” he added.
“There are growing signs that the fragile trust between the Chinese people and the Chinese Communist Party is beginning to erode, which could lead to a breakdown in social cohesion,” Singleton said.
Experts said the unemployment issue has come at a sensitive time for the Chinese leader. Xi is seeking a historic third term when the Communist Party holds its congress next month.
“The Party Congress is now so close that I don’t see any significant risk that the dismissal will disrupt preparations for, and accept, Xi Jinping’s nomination, which would break the foundation for a third term in office,” he said. George Magnus said. The China Center at the University of Oxford.
But youth unemployment poses a “major threat” to China’s economic and political stability in the long run.
It is not that the government is not aware of the problem, but so far it has not been able to come up with a concrete solution.
In June, the Ministries of Education, Finance, Urban Affairs, and Human Resources and Social Security issued a joint statement, offering tax incentives and loans to local governments and village officials to college graduates. Ordered to attract to work or start business there.
The sanctions are hurting the world’s second-largest economy – analysts are forecasting growth of just 3 percent or less for this year. Excluding 2020 — when the pandemic began in China — it would mark the country’s slowest annual growth since 1976.
But the Covid policy is likely to remain in place for several months, as 11 will not want to see an uncontrollable spike in Covid cases until its political future is secured.
According to Magnus, “It is likely that China will continue to struggle over the next several years with a greater risk of economic instability.”
For graduates like Cherry — who is still unemployed — that means giving up their dreams of joining the tech industry and turning to low-paying government jobs for stability.
“I wanted to work for Internet companies after graduation, because I’m so young,” she said.
“But because of this incident, my thinking has changed. I think it is good to have stability now.
CNN’s Mengchen Zhang in Beijing contributed to this report.