In 2023, the youth unemployment rate for people between the ages of 16 and 24 hit a major setback of 21.3% in June. It has created a panic nationwide, following the government announcement that it will no longer publish the statistics. The country is doing its best to recover from the pandemic and create jobs by adopting policies like home-buying incentives and infrastructure investment.

However, the reasons for China’s high unemployment rate are deeply rooted in its state-dominated policies, misaligned workforce, and party’s ideological-driven tactics in certain industries. Are you interested in knowing more about this? Keep reading this guide.

Unemployment Rate Trend in China 2017-2024

In 2017, the National Statistics Bureau of China introduced a new survey stating unemployment as a new indicator in the country. However, ever since, the survey was criticized for leaving out large parts of the urban areas of the country. Similarly, another area of concern for Chinese authorities was the large regional differences, which made it difficult to analyze and collect unemployment data.

In 2021, the result of the unemployment data displayed an increase in the remote Northern parts of the country. However, Beijing, which is also China’s political and economic hub, noted a 3.2% unemployment rate. In comparison, as of the latest data released in 2024, the urban areas of China have witnessed approximately 5.2% unemployment rate.

Structural Unemployment in China

According to the IMF, China’s economy grew around 5.2% last year; however, at the cost of a high unemployment rate. Much of this unemployment lies among young people between the ages of 15 and 24. The foremost reason for a relatively high unemployment rate has made the country’s largest property developers experience serious debt problems.c

According to experts, China’s real estate problem is directly linked with local government finanes, as it has historically depended on land sales to developers for significant revenue. In the current times, it has increased financial risks and hit consumer confidence significantly. Most believe that it is because the government is trying to make a recovery in a targeted manner by focusing on a few high-economic-value sectors.

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By following the industry-driven strategy, the country has attracted young talent to migrate to a few emerging sectors like integrator circuits and electric vehicles. However, even in these sectors, the jobs created are for low to medium-skilled workers and have little appeal to University graduates. The entire situation has made it hard for China to absorb its labor force.

Why is Youth Unemployment High in China?

China’s workforce has suffered a major setback in the past few years, most of which is a determinant of biased government policies and misalignment between training and job demands. The COVID-19 pandemic has added to the unemployment rate, resulting in massive joblessness among the country’s youth. Here are a few reasons why unemployment is really high in China.

Unproductive Property and Construction Sector

The first reason for the high unemployment rate is the state-dominated construction and property sectors. Because there is minimal competition, the departments are predominantly unproductive, compelling most young Chinese to go for job opportunities in the service sector, which is already responsible for providing jobs to half the national workforce.

It has eventually resulted in new stimulus-driven job opportunities in high-demand fields like bricklaying and carpentry, which hold zero interest for graduates in technical areas like literature and computer science. Hence, the situation of the upcoming massive flux of graduates does not seem to have high hopes in the service sector.

Misaligned Workforce Requirements

Research done by Goldman Sachs suggests that there is a significant mismatch between the skills graduates acquire from their university degrees and those required by the employees. This misalignment has resulted in acute joblessness in some industries. For instance, in 2021, the number of graduates in sports and education grew by 20% from that of 2018; but the hiring demand in the market significantly weakened, resulting in unemployment.

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Though, in current times, the regulations have changed and government policies have helped improve the situation, it is of minimal use. The government has also taken some steps to promote certain employment programs for college graduates, including 1 million new internship programs for graduates. However, resolving this issue requires long-term planning.

Party-Ideological Policies of the Service Industry

Moreover, when it comes to the service industry, it is already being beaten down by party ideological policies, mostly centered around controlling the growth of private sector firms in service areas. In the year 2020, private companies specializing in technology and education witnessed a huge downturn. Though the companies recover eventually in the first quarter, the government policies are still a huge threat to upcoming ventures.

What is causing China’s youth unemployment?

There are several reasons for China’s youth unemployment, including real estate, poor service sector policies, labor market gyration, and low demand for graduates across the country.

What is the current unemployment rate in China?

As of 2023, the surveyed unemployment rate in urban areas of China ranged at 5.1%, as compared to 5.0% in the previous quarter.

What is the poverty rate in China?

The rapid economic growth in China has helped the country to reduce the poverty rate from 66.3% to 0.3% in recent times.

In essence, understanding the high unemployment rate in China is a bit complicated, much of which comes down to the country’s local policy-making structure. The country has a history of state-dominated policy-making networks, which have done more bad than good, especially in the local arena. I hope this guide has been helpful for anyone trying to understand the high unemployment rate in China.