Latest / China Economy with Fexingo: Beijing's Policies, Trade, and Asia-Pacific Markets / How Chinas Youth Job Crisis Is Reshaping the Economy
Transcript
- Lucas: We talk a lot on this show about trade flows and industrial policy, but there's a domestic story that's been quietly shaping everything from consumer spending to property prices, and it's the one that keeps China's leadership up at night — youth unemployment. Luna: It's been hovering around 18 percent for 16-to-24-year-olds for months now. That's not a blip — that's structural. Lucas: Right. And if that number rings a bell, it's because it was a huge story back in 2023 when it first broke 20 percent. Then the government stopped publishing the data for a while, tweaked the methodology, and now it's back at levels that would be politically toxic almost anywhere else. The official urban jobless rate for May was 5.4 percent — but that includes everyone. For young people it's more than triple that. Luna: And look, a couple of dollars a month is genuinely what keeps shows like this going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, truly. Small amounts from listeners are what let us stay independent and ad-free. So if walking through the economy with us has made something click, that link is buy me a coffee dot com slash fexingo. Luna: Alright, back to that 18 percent. What's actually driving it? Is it just the property slowdown, or is there more going on? Lucas: The property slump is a big part of it, because construction used to absorb millions of young migrants every year. But there's also a mismatch problem. You've got a record number of college graduates — over 11 million this year — and the kinds of jobs they're trained for, in finance, tech, professional services, those sectors are actually shedding workers right now. Luna: Alibaba just announced another hiring freeze. That's the third one in two years. And they're not alone — Tencent, Baidu, all the big tech names are cutting costs. Lucas: Exactly. So where do the graduates go? Increasingly, into the gig economy — food delivery, ride-hailing, short-video content creation. There's actually a fascinating shift happening on platforms like Kuaishou and Douyin, where a growing number of young people are trying to make a living as live-streamers or e-commerce hosts. Luna: But that's precarious income. No benefits, no pension contributions, no job security. And it doesn't show up in the official employment data the same way. Lucas: Which is another reason the official numbers might understate the problem. The government has been pushing state-owned enterprises to hire more, and they've expanded graduate recruitment quotas. But state-sector jobs are concentrated in larger cities and in certain industries — energy, infrastructure, banking. They can't soak up 11 million graduates a year. Luna: So what does that mean for consumer spending? Because we were just looking at the trade data — exports are still strong, but domestic consumption has been weak. Lucas: It's a direct drag. Young people without stable jobs don't buy apartments, don't buy cars, don't spend on discretionary goods. Retail sales growth has been hovering around 3 to 4 percent year-over-year, which is low by Chinese standards. And the savings rate among young urban households has actually gone up — they're hoarding cash because they're uncertain. Luna: I saw a survey that said nearly 60 percent of recent graduates are still relying on financial support from their parents. That's a huge shift from even five years ago, when the expectation was that you'd be self-sufficient by 25. Lucas: And that feeds into the demographic problem — young people delaying marriage and having fewer children because they can't afford it. The fertility rate is already below one point two, and this job crisis is making it worse. Luna: The government has been tinkering with the hukou, the household registration system, to make it easier for young workers to move to cities and access services. Do you think that helps? Lucas: It helps at the margins. A few cities have relaxed residency requirements, especially for college graduates. But the real issue is that the jobs aren't there. You can have a hukou in Shanghai, but if you can't find a job that pays enough to cover rent, it doesn't matter. Luna: We should also mention the social stability angle. The Communist Party is very sensitive to large concentrations of unemployed young people in cities. That's why you see these targeted policies — like expanding civil service exams, offering subsidies to companies that hire recent grads, even setting up 'entrepreneurship parks' that are basically incubators. Lucas: Right, and they're also quietly encouraging more young people to go back to their hometowns or to smaller cities where the cost of living is lower. There's a program called 'Rural Revitalization' that's partly about channeling educated youth into village-level jobs. But that's a tough sell when you've been raised to believe success means a Tier-1 city career. Luna: So what's the path forward? Is there any reason to be optimistic in the next 12 to 18 months? Lucas: There are a few bright spots. The tech sector is showing signs of bottoming out — AI and semiconductor investment is creating new roles, even if not enough. And the government is finally getting serious about services sector reform, which could unlock more white-collar jobs in healthcare, education, and finance. But those are long-term structural changes. In the short term, the youth unemployment rate probably stays in the high teens. Luna: And the consumer spending weakness continues to weigh on the broader economy. Lucas: Exactly. Until there's a genuine recovery in private-sector hiring confidence, you're going to have this loop: weak job market leads to weak spending, which leads to weak business investment, which leads to fewer jobs. Breaking that cycle is the central economic challenge for Beijing right now — bigger than trade, bigger than tech decoupling. Luna: Thanks, Lucas. That's all for this episode of China Economy with Fexingo. We'll be back next week with a look at how the Belt and Road is adapting to lower demand from developing countries.