Record youth unemployment in China as the economic growth slows down

• Most young people are ultimately getting jobs, but ones that might not pay the best or match their area of study, according to CNBC interviews with six students and recent graduates.
• The primary reason for high youth unemployment is insufficient demand from businesses, said Zhang Chenggang, director of a research center for new employment forms at the Capital University of Economics and Business in Beijing.
• Youth unemployment has remained persistently high over the last three years, while the overall jobless rate for people in cities has officially stayed far lower, near 5%.

BEIJING — Ask young people about the Chinese job market, and the frequent answer is things are more difficult this year.

Most people are ultimately getting jobs, but ones that might not pay the best or match their area of study, according to CNBC interviews with six students and recent graduates. Many requested anonymity since youth unemployment can be a sensitive topic in China, especially for those in the middle of a job search or just starting a career.

The job market can be so tough that one student from a top university told CNBC his classmates are sending out at least 100 resumes, if not more.

“Some classmates have sent out more than 200,” the student said, noting he felt fortunate having applied to 80 positions before getting three job offers. He just graduated from Shanghai Jiao Tong University and is set to start work at Huawei later this summer. Shanghai Jiao Tong University is ranked third in China, and 89th globally, according to U.S. News and World Report rankings.

The unemployment rate for China’s young people ages 16 to 24 climbed to a new record high in June of 21.3%.

The primary reason for high youth unemployment is insufficient demand from businesses, said Zhang Chenggang, director of a research center for new employment forms at the Capital University of Economics and Business in Beijing.

Businesses aren’t certain about the future right now, making them reluctant to hire young workers — who typically need to be trained, regardless of the education system, Zhang said.

Youth unemployment has remained persistently high over the last three years, while the overall jobless rate for people in cities has officially stayed far lower, near 5%.

In the U.S., the unemployment rate for people ages 16 to 24 hit a high of 27.4% in April 2020, before falling to near 7% this year, according to U.S. Bureau of Labor Statistics data.

One 2023 graduate in China said her class missed out on job opportunities because large internet companies were only looking for current students (not graduates) to begin internships that might turn into jobs. In contrast, she said that when she was still a student, the pandemic was still ongoing and she had not heard of such opportunities.

“I feel like our employment [situation] is much harder,” she said in Mandarin, translated by CNBC.

Slowing growth

China’s economic rebound from the pandemic has slowed in recent months. Exports have fallen steadily. The massive real estate sector has yet to turn around.

Hiring plans have fallen, according to a monthly survey of mostly non-state-owned businesses run by alumni of the Beijing-based Cheung Kong Graduate School of Business. The CKGSB recruitment index fell to 54.2 in June, continuing a drop from 64.6 in April.

A similar business survey for May by Caixin found a slight increase in the service sector’s demand for workers. But manufacturers’ hiring plans fell to the lowest since February 2020.

Competition everywhere

Even in the government-supported, popular industry of semiconductors, the job search is getting harder.

The “hot” period of expansion has passed and the industry is in a period of settling, said Zimri Sun, who is starting his job search this summer ahead of graduating from his master’s program next year. That’s according to a CNBC translation of his Mandarin-language remarks.

Sun is studying information and communication engineering at Shanghai Jiao Tong University. He said he’s confident he will find a job, but knows the process will be hard.

For some fields, the pandemic and regulatory changes have eliminated many of the jobs once popular among young people in China — while the annual graduating class has swelled to record highs. The class of 2023 had nearly 11.6 million students, according to official estimates.

Zhang expects the unemployment rate for young people to drop toward the end of the year, after the summer graduation season.

He noted that since many families in China have become more affluent, more young people can also afford to take their time to prepare for higher education exams and find a job with work-life balance.

For some, the situation may even prompt inaction.

“Every year people say it’s hard to find a job. This year, people are more relaxed,” another 2023 graduate said, noting recent world events have demonstrated the futility of planning. That’s according to a CNBC translation of the Mandarin.

Taking more time for tests

In a broader search for job stability, a record 7.7 million peopletook the civil service exam in China this year. More than 4.7 million people registered for an annual postgraduate studies exam in December, a new record, according to state media.

When Sirui Jiang was about to graduate last year, she said she applied for another master’s program as she’d rather pursue that than a job she didn’t want.

“These years are really challenging, especially for the newly graduated students, because we don’t have experience and it’s quite hard for us to find jobs not only in China but all over the world,” she said.

Jiang, who studied abroad in Europe, said she focused on making her resumes show why she was a fit for a company — something she said students didn’t always do well.

She now works remotely from her hometown in China as a sci-tech engagement coordinator at GFI Consultancy, a Shanghai-based firm focused on the alternative protein industry.

CNBC