China’s 19.6% youth unemployment rate may pose ‘a threat to social stability’

Unemployment among those aged 16 to 24 rose to 19.6% in March, up from 18.1% in both January and February, and inching toward the 19.9% of last July, the highest level since records began in 2018. Youth unemployment was 16% in March 2022.

Joblessness among the young remains “stubbornly high,” says Alicia Garcia-Herrero, chief Asia Pacific economist at investment bank Natixis.

China’s worsening youth unemployment situation was an outlier in a report that otherwise showed an improving economy.

The National Bureau of Statistics reported 4.5% GDP growth in the first quarter, beating expectations of 4% from a Bloomberg survey of economists. Retail sales surged 10.6% year-on-year in March, increasing from the 3.5% growth recorded in January and February. Last week, Chinese officials reported a surprising 14.8% surge in exports, driven by electric vehicles and trade with Russia and Southeast Asia. And the overall job market is improving, with urban joblessness of 5.3% in March, down from 5.6% in February.

A rise in youth unemployment is often expected in March as graduates look for jobs again after the Lunar New Year holiday, says Larry Hu, the Macquarie Group’s chief China economist. Yet “weak confidence” will continue to constrain the job market, Hu says. “Companies are reluctant to hire more workers because consumers are cautious. But without a strong labor market, consumers will be hesitant to spend,” he says.  

China’s industrial production and fixed-asset investment rose at slower rates than expected last month. Slower manufacturing and a weak IT sector may be two forces behind persistent youth unemployment, says Garcia-Herrero.

Boosting youth employment may be “a challenge with many businesses—especially internet businesses—in a wait-and-see mode,” says Bert Hofman, director of the East Asian Institute at the National University of Singapore. 

Concerns about social mobility are now driving some Chinese youth to push back against societal expectations about careers and family. The “lying flat” movement, for instance, advocates doing the bare minimum to get by rather than working hard for a long-term reward that isn’t guaranteed. Some young Chinese are purposefully living paycheck-to-paycheck, calling themselves the “moonlight clan;” participants buy luxuries like an overseas trip now to make up for longer-term disappointment. 

“Unsustainable” youth unemployment could become “a threat to social stability,” says Brock Silvers, chief investment officer at Kaiyuan Capital, a private equity firm. But he notes that Beijing faces a number of on-going economic issues, such as the real estate crisis, and so tackling the youth jobs crisis may fall by the wayside. That will put Beijing in “a tough position with regard to today’s youth, who are increasingly feeling alienated from China’s economic prosperity,” he says.