China youth unemployment hits record high

• Posted on July 17, 2023July 17, 2023
• by Nana Kwesi Coomson
• Comment

Youth unemployment in China has hit a new record high as the country’s post-pandemic recovery falters.

The jobless rate of 16 to 24 year olds in urban areas rose to 21.3% last month, official figures show.

It comes as the world’s second largest economy grew just 0.8% in the three months to the end of June.

Analysts say the weak pace of growth has raised expectations that authorities may soon announce new measures to boost the economy.

China’s National Bureau of Statistics said the data “showed a good momentum of recovery”.

According to official figures released on Monday, the Chinese economy grew by 6.3% in the second quarter on an annual basis. It outstripped growth in the first quarter but missed analysts’ expectations.

“The disappointment is particularly evident in retail sales and housing investment,” Qian Wang, Asia Pacific chief economist at investment firm Vanguard, told the BBC.

“This, coupled with earlier trade, inflation and credit reports, reaffirmed our view that the underlying growth momentum is still very weak,” she added.

Global demand for Chinese goods has fallen significantly. There are also concerns over ballooning local government debt and the housing market.

Youth employment is being closely watched by economists as a record 11.58 million university graduates are expected to enter the Chinese jobs market this year.

The unemployment rate for urban youth has been climbing for several months. This is due to factors including a mismatch between what graduates were trained to do and the jobs currently available.

Authorities have admitted that youth unemployment will probably continue to rise in the coming months, before hitting a peak around August.

Unemployed young people make up just 1.4% of the potential workforce in China’s urban areas, Dan Wang, chief economist at Hang Seng Bank China has estimated.

However, she told the BBC that the issue of youth unemployment “demands more direct policy responses, because this group of the population is quite vocal online.”

“Their expression of discontent of the current situation may trigger a wider loss of confidence in the economy,” she added.

China started publishing youth unemployment figures in 2018. However, it does not currently release data on the employment status of young people in rural areas.

In March, Chinese Premier Li Qiang said the country needed to redouble efforts to meet its 5% target for economic growth this year.

He said that the target would “not be easy” to meet although the economy was “stabilising and picking up again”.

Last month, China’s central bank cut interest rates for the first time in nearly a year to encourage more spending. But experts say the government still has more weapons in its arsenal to stimulate the economy should the situation fail to improve.

-BBC