The 19 Percent Revisited: How Youth Unemployment Has Changed Chinese Society
“Aside from record numbers of new graduates, Chinese youth face momentous challenges that make securing a job even more difficult. These include the aforementioned U.S.-China trade war and rise of AI and automation as well as the housing market slump, which has significantly affected Chinese consumers’ willingness to spend. These shocks will only intensify the stress many young people feel about establishing secure lives. While it is too early to discern the impact of the U.S.-China trade war, Goldman Sachs estimates that as many as 20 million Chinese workers could lose their jobs as a result of declining exports to the United States.”
“Moreover, China is struggling with deflationary pressures. Consumer prices have fallen for six consecutive quarters. Household consumption accounts for 39% of Chinese GDP, significantly lower than in most developed economies. In 2022, people aged 20 to 39 accounted for 26.7% of the population but contributed 29.1% of total consumption, making them the highest-spending demographic. But the link between unemployment and consumption is a vicious cycle. These same young people, who accounted for nearly 45% of the downturn in spending over the period from 2018 to 2022, are at greater risk of being unemployed. Because they play an outsized role in overall consumption, their reduced spending only perpetuates the unemployment crisis.”
“Against the backdrop of a difficult job market and the broken dreams of tens of millions of young Chinese, a marked shift in perceptions of inequality is occurring. In representative national surveys before 2014, the majority of respondents believed that inequality in Chinese society was largely the result of individual failings in an ascendant China. By 2023, the majority saw inequality as a structural failing, related to unequal opportunities, corruption, and a failing economy.”