China’s tech project leaves young people jobless – DW – 09/17/2024

When China’s youth unemployment rate hit a high of 21.3% last year, Beijing did what authoritarian governments do whenever bad news emerges – they stopped publishing the data. After adapting its system for six months, China’s National Bureau of Statistics excluded students from the data and Bingo! – in December, youth unemployment dropped by almost a third.

Destroying the data, as many China watchers suspect has happened, does not solve the problem. In July, after several months of slight decline, the number of young people without a job rose sharply again – by a third to 17.1%.

Singapore-based Jiayu Li, a senior associate at public policy consulting firm Global Counsel, told DW that even the previous figures do not include millions of rural workers, who he says “face huge challenges to find a full-time job,” than those in the cities. institutions.

“Official figures do not accurately capture the true situation on the ground. Even after questionable changes in procedures, the figures are still rising, highlighting the severity of the problem,” said Li.

Although China’s economy may no longer expand at double-digit annual rates, as it did in the early 2000s, the Asian titan is still projected to grow by 5% this year, a number that many Western countries can only dream of. So, why can’t China generate enough jobs for the 12 million students and millions of school leavers who enter the workforce each year?

So much for Xi’s promise of “common success”

Manage structural issues, COVID-19, slow post-pandemic recovery and trade tensions with the West. But just as hampering economic growth, as well as the job prospects of many young people, have been President Xi Jinping’s big cuts to the tech, real estate and private education sectors in 2020/21.

China’s tech giants, whose rule was targeted by Xi’s reforms, lost more than billions of dollars in market value. The property sector collapsed, taking tens of millions of people’s life savings. China’s thriving technology education sector, which provided private tuition to an estimated 75 million students, collapsed. Many layoffs followed and many of those affected were new employees.

For example, online education platforms have been popular for many years, due to the intense competition for university education among Chinese students and the cultural emphasis on high grades. In 2019, an estimated 10 million people were employed in China’s private sector, most of them recent graduates.

“Xi’s presentation caused a lot of tension in the sector,” Diana Choyleva, chief economist at London-based Economics, told DW. “Although teaching jobs did not disappear completely, they became less stable and less reliable, reducing the one method that underperforming students had used to reduce opportunities. their shrinking economy.”

Young people avoid manual labor

Another concern is the discrepancy between expectations and reality. Young people continue to eschew blue collar jobs to compete for higher paying positions. Logic suggests that young people can make up the bulk of blue collar workers because of their good health and hard work. But Chinese media cited a study by Beijing’s Capital University of Economics and Business last year that found that nearly half of the country’s 400 million manual workers are over 40 years old.

“Vocational skills are often in high demand, but these paths and jobs are considered less desirable. [by young workers],” Nicole Goldin, a senior non-resident at the Atlantic Council think tank in Washington, told DW. to see any impact,” he added.

More chips than workers needed?

As China’s economy continues to climb the value chain, Beijing is eyeing global technology dominance. Big investments in artificial intelligence (AI), chip manufacturing and green energy will help reduce China’s dependence on the West. But these sectors do not need many new workers.

“The government is focusing on emerging sectors such as AI and electric vehicles, which are small, labor-intensive, and offer few jobs,” said Global Counsel’s Li. “This stifles innovation and technological breakthroughs — ironically, the very thing Beijing wants to rely on to drive future growth.”

Li said the ongoing trade conflict with the West is also putting China’s export industry under pressure as it has to “replace high-quality orders from the vulnerable West with low-quality ones from Global South,” to good effect. by work.

Hustle culture problem

Meanwhile, work in the gig economy, which is often driven by digital platforms for food delivery, car sharing or social media influence, has become saturated. About 200 million Chinese make a living from these types of dangerous jobs, so many young people have given up trying to keep busy.

“Affluent young people may have chosen to get more education and many are choosing to ‘tell a big lie,'” Goldin said, referring to the growing movement of a community known in Mandarin as Tang Ping, where young people resist societal pressures to be overachieving and seek a less materialistic life. .

He also explained how a growing number of young Chinese are becoming “children of professionals or grandchildren,” providing elderly care for their relatives – a process that is increasing due to aging and rising costs. are increasing.

Now the Chinese entrepreneurs are safe

By leaning heavily on the private sector, Xi has crushed start-up investment and the willingness of young entrepreneurs to take risks. The number of new startups in China has fallen by 97% in the last six years, British business daily Financial Times was reported this week – up from more than 51,000 in 2018 to some 1,200 last year.

Choyleva told DW that businessmen and financial firms have become “very corrupt” because of tough new regulations that have forced the private sector to conform to the Communist Party’s values, which he says are “a serious contradiction of the plan.” of the government.”

“How can private time drive innovation when entrepreneurs are not willing to take the risk of starting a business? In the long run you lose companies that would have encouraged young people to do more jobs, and more results that they would have had for the country,” he said.

If China is to overtake the United States as the world’s largest economy, young talent must play a key role in driving that growth, Goldin agreed.

“[High youth unemployment] it reduces productivity and will hamper China’s ability to compete globally. These unemployed young people will not be able to enter the middle class, which will have a negative impact on spending and have potentially destabilizing effects on society that can further hamper growth.

Edited by: Uwe Hessler