The Journal. - Why Millions of Chinese Young People Are Unemployed

Episode Date: August 8, 2023

More than one in five young people in China are jobless. The government blames college graduates, insisting that their expectations have gotten too high. WSJ’s Brian Spegele unpacks why new grads are holding out and what it could mean for China’s economy. Further Reading: -How Bad Is China’s Economy? Millions of Young People Are Unemployed and Disillusioned  -China’s Economic Recovery Weakens  Further Listening -Xi Jinping Is Rewriting the Rules of China's Economy  Learn more about your ad choices. Visit megaphone.fm/adchoices

China's once-buzzing economy is a shadow of what it used to be. Analysts projected it would come roaring back once COVID lockdowns eased up. But that hasn't been the case. And the job market for new graduates is especially bleak. Many of them have taken to social media to share their struggles through day-in-the-life videos. Many of them have taken to social media to share their struggles through day-in-the-life videos. Lately, life is like this. Either I'm interviewing or on the way to interviewing.

When I had left home, my family asked, what kind of a job do you want? That time, I still had ideals and goals. Now, I don't have any standards, as long as I can make money. I want to ask you all, when you all are looking for jobs, is it also this hard? More than 20% of young people between the ages of 16 and 24 who want a job don't have a job. Our colleague Brian Spiegel, based in Beijing, just came back from a reporting trip where he tried to figure out why. The most surprising thing I took from this trip is that it's not that jobs don't exist in China. Jobs do exist in China. Jobs do exist in China. The real crux of the matter is that there's a disconnect between

the sorts of jobs that young people want today in China, especially college graduates, and the sorts of jobs that are available to them out in the market. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, August 8th. Coming up on the show, millions of young people in China can't find the work they want. Summer is like a cocktail. It has to be mixed just right. Start with a handful of great friends.

Now, add your favorite music. And then, finally, add Bacardi rum. And there you have it. The perfect summer mix. Bacardi. Do what moves you. Live passionately. Drink responsibly. Copyright 2024. Bacardi. It's trade dress and the bat device are trademarks of Bacardi and Company Limited. To get a sense of what's going on with new graduates in China,

Brian traveled to a city called Hefei. Around 9 million people live there. Brian says it's kind of like a Cincinnati with way more people. We wanted to go to a place that was not one of the wealthier Chinese cities out there, like Beijing where I live or Shanghai or Shenzhen for that matter. We wanted to go to a place to kind of understand what does it feel like to be, quote-unquote, an ordinary Chinese at this moment, particularly a young person. One day we went to a recruiting site,

and this recruiting site specialized in finding basically factory jobs, factory work, assembly line work for people of any age. And we go, and I'm expecting it's going to be completely rammed with people, given the state of the economy and everything that I'd read about unemployment, youth unemployment, and the place was entirely empty. And I'm kind of scratching my head about this. That empty recruiting site reflects the gap between the kinds of jobs that students want and the jobs that are actually available in China today.

And the gap is growing. Just to take university students alone, in 2023, the government estimates 11.6 million people are going to graduate from Chinese colleges. And if you compare that to just 2019, that number was only 8.2 million. For so many years, the Chinese government has been prioritizing the education of young people, trying to move its economy up the value chain into higher skill, higher knowledge work.

And so people heeded those calls and they went to college. Many college grads chose fields that would get them into high-paying industries. In China, that often means white-collar jobs in the private sector or inside one of its huge state-owned companies. What the data shows is that the tech space generally, according to one survey from a recruitment firm, it showed that 25% of undergrads wanted to go work in the tech space broadly defined. The next highest category had like less than half of the same proportion. So what it shows is that, not surprisingly, ambitious people in China, just like they want to go work for Google or whatever it is in the United States, they wanted to go work for the hot tech company in China too.

But when COVID hit, the Chinese government under President Xi Jinping imposed years-long restrictions that really hurt the economy. On top of that, Xi also implemented policies to rein in growth of the very same industries that students wanted jobs in. The government of Xi Jinping had been on a very aggressive regulatory campaign against all sorts of private businesses, in particular businesses in the consumer technology space, big internet platforms, the property sector was being reined in. All that made the job hunt harder for new graduates. On his reporting trip, Brian talked to one of them.

We met Liu Xinyu. We met her in Hefei at a coffee shop in Hefei. She graduated from college this spring. Liu is 23, and she went to university in Hefei. She wanted to study animal sciences, but her parents convinced her to get a degree in engineering instead. And how did her parents respond when she agreed to study engineering? Yeah, I think they were all happy and proud of kind of where she was going.

It really looked kind of like a pretty close to a sure bet that things were going to turn out well. But then while she was in school, COVID happened. And when she graduated, the job hunt was rough. She told us she had an interview at a state telecommunications company that she was kind of excited about. It didn't happen.

And then she had another one at a giant kind of appliance maker in China. Also didn't happen. Eventually, Liu settled for an internship at a company that sold cell phones at a local shopping mall, not the engineering job she expected. And she said, like, well, this is not exactly why I studied engineering. And she found herself kind of scratching her head saying, well, this isn't what I studied to do. Why did I spend the last, you know, three years?

What did I do all that studying for? The other thing that happened in Liu's case that was kind of interesting was when she was a trainee, she was getting paid the Chinese equivalent of like $630 a month, which doesn't sound very much in the United States, but you could live off of it in Hefei. Well, you know, as she gets to the end of her traineeship, internship thing, they offer her a full-time job. But as part of that, they cut her base salary in half. And they say, the rest of your salary can come from commissions. And she's doing the math in her head,

having seen the local economy, saying, there's no way I'm going to get even close to making the amount of money that I was making as a trainee. Liu decided not to accept the offer, and she left the company. Her family is supporting her while she considers her next steps. It's important to remember that the young people in China today, the sort of people who are graduating from college,

many, if not the vast majority, come from single-child families as a result of China's one-child policy. So parents, in many cases, have thrown everything into the success of their single child. And so if they're coming out of college and the parents have worked really hard and tough jobs for a long time for their kid to go to college, and they do, and they come out and there's no job available. I think the parents, in many cases, they're okay. They don't want them to have the same difficult life that they had. Right. It doesn't seem like progress.

Yeah. Why would somebody who had studied so hard in the Chinese education system for so many years, had been under pressure by their parents to kind of go out and get the best job and to, you know, to do them proud, why would they then be willing to fall back on a blue-collar job? And that's when it began to hit me. In part, the phenomenon of youth unemployment today

is a matter of expectations. And the Chinese government has very different expectations than those of young graduates. How that friction is playing out, that's next. Wherever you're going, you better believe American Express will be right there with you. Heading for adventure? We'll help you breeze through security. Meeting friends a world away? You can use your travel credit. Squeezing every drop out of the last day?

How about a 4 p.m. late checkout? Just need a nice place to settle in? Enjoy your room upgrade. Wherever you go, we'll go together. That's the powerful backing of American Express. Visit amex.ca slash yamx. Benefits vary by card. Terms apply.

Summer's here, and you can now get almost anything you need for your sunny days delivered with Uber Eats. What do we mean by almost? Well, you can't get a well-groomed lawn delivered, but you can get a chicken parmesan delivered. A cabana? That's a no. But a banana? That's a yes. A nice tan?

Sorry, nope. But a box van? Happily, yes. A day of sunshine? No. A box of fine wines? Yes. Uber Eats can definitely get you that. Get almost, almost anything delivered with Uber Eats. Order now. Alcohol in select markets. Product availability may vary by regency app for details. China's economy still depends a lot on manufacturing and exporting stuff to the rest of the world. But young people just aren't rushing to take factory jobs anymore.

So, publicly, what has the government been saying about the job situation? The government's message to young people is pretty clear. It's go and get a job. One of the slogans they like to use is is find a job first, find a career later. When you read newspapers like the People's Daily, which is the Communist Party kind of mouthpiece or flagship newspaper, you understand that their message to young people is you're not too good for blue-collar jobs. And the contributions you can make to society on working on a factory line are a lot better than if you're sitting on your parents' sofa.

Like, your duty, essentially, is to be working, not to be waiting for the right job to come up. Yeah, and I think when young people see this, there's a lot of scoffing about all this. There's a lot of people feeling like the party's out of touch when they make statements like this, that they don't recognize how difficult the job market is. But the government is also taking action. They want to get young people working, doing any kind of work.

They're offering subsidies to companies to hire new grads and rolling out loans to young people who want to start a business. Why does this situation matter so much to the Chinese government? A stable economy and a stable job situation are so fundamental to Xi's vision of making China a much more powerful country. But if you're not able to jumpstart people's careers early on, there can be so many knock-on effects from that. You know, what we're seeing in China, for example, is that if you don't have a stable job or stable income, you're going to be much less likely to go out and buy property. That puts pressure on the real estate market, which can then create financial

risks for China. So you can begin to get a flavor of some of the economic costs of the fact that many young people in China are unemployed today. So there are clear economic consequences, but there could also be political ones. For the communist party, the risk is that millions of young people end up living on kind of the fringes of society. They're a bit bored without a clear direction. We're talking about such huge numbers of people, millions and millions of people. I think it's more than 11 million people

are graduating from college in China this year. So you have to be careful about how much you generalize. But that's at least what I found in Hefei when I was there talking to people. At what point do these people begin to get disgruntled about how they're doing in life, about their prospects for the future? You know, already we see many Chinese scholars talking about the risks

to social stability of young people not having jobs. Does it seem like there's a future where the government just makes young people go to work, whether they want to or not? There is no evidence of the government forcing anybody to take a job, which might have happened, you know, 50 years ago or, you know, under Mao Zedong, for example. And I would find it highly unlikely they would try to implement a system like this. And so what does this situation mean for China?

It's one more important data point that the Chinese economy is facing serious issues right now. What the evidence shows is that the youth unemployment problem is at least in part a reflection of a lack of confidence and a lack of hiring, especially by the private sector. So the question to my mind will be, what does Xi Jinping do next? Up until this point, there's been a high priority placed on ideology. Does he take a more pragmatic turn? I think as we've seen many of the problems become much more pronounced in the Chinese economy, the Chinese government has said many things designed to shore up the confidence of business, to give them the confidence to invest, to hire young people, to grow their businesses for the future. But at the same time,

it's really important to also note that many of the investors and the investors and economists that we speak to, they're really skeptical of empty promises. That's all for today, Tuesday, August 8th. The Journal is a co-production of Gimlet and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.