Youth Unemployment in China: Is a University Degree No Longer Enough?

In the West, much of the conversation about China’s economic troubles focuses on three major issues: the slowing down of GDP growth, the housing bubble, and the low rates of household consumption. Much less discussed, however, is Beijing’s fight against urban youth unemployment. 16-24 year olds, often university graduates, mark the highest unemployment rate in the country among all working age ranges. Youth unemployment is shaping up to become one of the most important challenges for the Chinese government in the years to come.

The leadership’s concerns stem from both practical and political motivations. For the country to continue to grow at the speed set by the Central Committee, 4-5% of GDP, unemployment must be meaningfully addressed and the youth reintegrated into the active labor force. At the same time, for Zhongnanhai, millions of  jobless university graduates represent a potential threat to stability. Protecting the status-quo, a fixed goal of the Party, requires preventing centers of discontent from emerging, such as an unemployed youth. The threat is amplified by the fact that university graduates have played an outsized role in episodes of political mobilization in China.

Let’s look at the data. In August 2023, China halted the publication of youth unemployment figures, after the rate had reached a record high of 21.3%. Four months later, the National Bureau of Statistics resumed the monthly survey with an updated methodology and a new, lower number: 14.9%. Over the past two years, however, the data has remained more or less the same, touching a recent high in March 2026 of 16.9% and demonstrating surprising resilience against government policy. The rate will likely rise further as the highest number of new university graduates in Chinese history, 12.7 million, is expected to enter the job market in the fall. Regardless of how Beijing has revised this survey, its data remains particularly important to measure changes in the Chinese economy and suggest the direction of future government policies. 

In recent years, the Chinese economy has undergone one of the largest structural transformations of any major economy. Although China remains a manufacturing powerhouse, its output is vastly different from even 10 years ago. At the beginning of the 2010s, the country was best known for producing cheap, labor-intensive manufacturing: clothes, shoes, toys, furniture, inexpensive consumer goods, and simple electronics. Today, it leads the world in the EV race and is actively competing with the United States in fields such as space and artificial intelligence. From solar panels to wind turbines, high-speed rail equipment, robots, or AI models, today’s China  increasingly resembles a technologically advanced industrial economy, even if it still classifies itself as a developing country.

It is not uncommon for transitioning economies to have high youth unemployment. Rapid growth, accompanied by a concerted emphasis on education, as in the case of China, can drive the number up. Young Chinese graduates increasingly refuse to take on once-popular manual, lower-paying jobs in factories and manufacturing plants. The problem, however, has mostly to do with the nature of China’s transition, which occurs at a crucial time in the history of human labor. Just like in the United States, technological advances, particularly in automation and, increasingly, artificial intelligence, are reducing the number of entry-level jobs available to college graduates. In China, this happens in conjunction with the rising popularity of higher education. Since 2010, the number of Chinese students enrolled in an accredited university has doubled from 31 million to over 61 million. At the same time, the number of new graduates entering the job market has risen from just 6 million to over 12 million. The two trends are on a clear collision course. 

These trends are not the only reasons why youth unemployment is so high. After a wild ride, most tech companies in China are no longer expanding at the same pace. For reasons other than just AI, these large conglomerates are increasingly looking for workers with expertise and specific skills, rather than generic programmers. The tertiary sector, usually a safe bet for university graduates, has also struggled to recover from the COVID-19 pandemic and, since 2021, the private education business has been suffering under increasing government control and limitations. Additionally, due to rising housing and living costs, living in large cities is becoming unaffordable, even as the country’s wages continue in their upward direction. All of this is contributing to widespread frustration among the Chinese youth.

Discussions on Chinese social media illustrate how the country’s youth is living through these challenging times. A popular joke claims that “a bachelor’s degree is like a dress one cannot, or does not want, to wear”. The point is that, with a university degree, comes a lot of social pressure. Families push their kids towards academic excellence as a gateway out of poverty. Failure to enroll in university results in social shame, in “losing face” （丢人 diuren）, for not just the individual, but the entire family. Once in college, however, there is no other way than up. College graduates, even if they wanted to, are shamed out of taking lower-paying, manual jobs. Although factories and manufacturing plants have plenty of open positions, the very fact of having obtained a university degree prevents them from accessing these opportunities. To do so would produce the same result: losing face. In a hit-post that brilliantly sums up the situation, a user complains:

“如果我没上过大学，当个送货员或在工厂里干活，我也不会觉得丢人。但一旦大学毕业，你就不能再这样了”

“If I hadn’t studied, I could work as a delivery man or do manual labor in the factory without shame. But after graduating, I no longer can”

But what is the government doing to address this problem? 

• Beijing is introducing subsidies for small enterprises (小微企业补贴 xiaowei qiye butie) who hire young workers below the age of 24. The central government hopes that, by paying part of the labor-related expenses in the first year, small enterprises will be more willing to hire young workers.

  
  

• A new rural employment program has been launched, aimed at addressing both national and local challenges: youth unemployment and regional inequality. With the help of the government, recent graduates can teach, work as medics, and “assist in the local development” (支持农村发展 - zhichi nongcun fazhan) of a rural area for two years, in exchange for extra points in the civil service examination (公务员考试 - gongwuyuan kaoshi). In this volatile environment, the civil service has become extremely popular due to its security and benefits. Thus, this measure is likely to gain traction among recent graduates.

Other measures are likely to be implemented in the next few years, as youth unemployment, and the socio-political threat it represents, continues to fester in the face of government policy. What this shows about China is the delicate relationship existing between the Party-state, the youth, and the country’s middle class. The latter, although only implicitly mentioned throughout this article, continues to live by the same, old social contract with the state. By pushing kids towards higher education and instilling the values of hard work, they are upholding their end of the deal. We are yet to see whether the government will be able to do the same or whether an entirely new social contract will be needed. 

Alessandro B. Carelli - 王硕

The Beijing Notebook - 北京笔记