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Xi tells Chinese College Graduates unable to find work to “吃苦,” while a top Chinese Economic Advisor Issues a Dire Warning about the Fallout from this Problem

Chinese Government officials and advisors are not known for honestly discussing their country’s economic and social problems.  Thus, a recent report issued by the China Macroeconomy Forum at prestigious Renmin University on the fallout stemming from high unemployment among Chinese college graduates comes as a breath of fresh air. 

This 110-page document is authored by a top Chinese Government economic advisor, Liu Yuanchun and his Renmin University colleague, Liu Xiaoguang, along with Yan Yan from the China Chengxin International Credit Company.  It did not mince words about potential threat youth joblessness poses to political and social stability in China.  “If not handled properly,” the authors warn, limited work opportunities for young Chinese “will spark other social problems beyond the economic arena, even becoming a trigger for political problems.”

According to official Chinese statistics, just over one in five, or 21%, of Chinese aged between 16 and 24 were unemployed in May, the highest figure on record.  The real number is surely higher, as Chinese Government employment data tends to understate jobless rates.  Press coverage of this issue abounds with stories of Chinese graduating from top-flight universities, both in China and overseas, sending out hundreds of resumes and getting very few interviews and no good job offers.  

President Xi Jinping has reacted to China’s youth unemployment crisis by telling young people having problems job-hunting to basically suck it up.  Clearly thinking back to his exile to the countryside during the Cultural Revolution, Xi is urging young people to “吃苦 (chī kŭ), which literally means “eat suffering,” arguing that embracing hardship will make them stronger individuals

The call to “吃苦” has not gone down well among frustrated better educated young Chinese job seekers.  This comes as no surprise, especially as “吃苦” also denotes enduring hardship, even in the absence of hope for better times ahead.  These college-educated youth, after all, grew up during what now may have been the tail-end China’s economic miracle.  They naturally hoped to find abundant job opportunities after graduating from college.  That view was reinforced by their parents, who urged their children to study hard and get the degree in the expectation that doing that would enable them to move up the socio-economic ladder.   Having already worked and studied hard, they are in no mood to listen homilies from Xi and other top government leaders about benefits of having to struggle.  They are understandably reluctant to settle for less skilled, less remunerative work unrelated to their degrees, despite condemnation from Chinese state media for being “unwilling to engage in jobs that are lower than their expectations.”  Such outlets are filled with stories of young people supposedly making good money and finding fulfillment in menial labor, such as delivering meals, recycling garbage, setting up food stalls, farming and fishing.

In an excellent May 30, 2023 NEW YORK TIMES editorial on this subject, Li Yuan reviews derisive reactions from frustrated young college-educated job-seekers to Xi’s calls to “吃苦” admonition.  One young lady with an MA in graphic design who, after extensive job searching, could only obtain low-paying internships with no benefits, acidly declared:  “Asking us to eat bitterness is like a deception, a way of hoping that we will unconditionally dedicate ourselves und undertake tasks that they themselves are unwilling to do.”  Another person quoted in the article, who was armed with a MA in urban planning, bluntly stated, “To ask us to endure hardships is to try to shift focus from the anemic economic growth and the decreasing job opportunities.”  

Rather than struggling harder, large numbers of young Chinese are choosing to do the opposite, namely dropping out of the rat race altogether.   Many have embraced the so-called “躺平 (tăng píng),” or “lying down” outlook, stressing doing the bare minimum possible to just get by.  Since March, a similar and more recent buzzword, “摆烂 (băi làn),” or “let it rot,” has generated hundreds of millions of reads and discussions on Weibo, China’s main social media chat platform.  In a typical variation of the “摆烂” attitude, one netizen grumbled, “Properties in Shanghai too expensive? Fine.  I’ll rent all my life, as I can’t afford it if I only earn a monthly salary anyway.” Such comments reflect the despair young Chinse are feeling in the face diminished social mobility and economic uncertainty, with latter accentuated by the lingering effects of several years of strict Covid lockdowns.

That, of course, is not how Chinese leaders see things.   For example, an article posted earlier in the spring in the state media trying to explain the growing popularity of “摆烂,” claimed that it is all “a result of negative auto suggestion, repeatedly telling oneself I cannot make it.”   

Besides telling un- and underemployed educated college graduates that they have largely themselves to blame for their inability to find work, the Chinese Government has taken some very modest steps to deal with youth unemployment.  Local governments have been urged to step up hiring of young people and offer subsidies to private employers to do the same.  Chinese State-Owned Enterprises (SOEs) are also being encouraged to take on more young college and university graduates.  It is hard, however, to see how these moves will lessen the employment difficulties of educated Chinese youth. 

Chinese municipal governments are currently reeling from the negative fiscal double whammy of implementing costly lockdowns during Covid and lower revenues from land sales caused by a slumping real estate sector.  Many cities, especially in the southwest, where the provincial governments of Guizhou and Yunnan Provinces have been teetering on the brink of bankruptcy, can barely pay their civil servants let alone hire more people or subsidize private employers to do that.           

Nor does it make sense to rely on SOEs to absorb unemployed college degree holders.  These firms are already monumentally overstaffed—I saw first-hand the massive featherbedding that goes on in such entities while doing corporate training work for a China National Petroleum Company subsidiary.  Every department had not just a manager, but an assistant manager, along with other posts that don’t exist in private companies, such as a Communist Party secretary.  College educated talent would be more productively employed in private firms, which account for 70% of China’s innovative capacity, rather than adding to an already bloated SOE workforce.   

Thus, Liu the Yuanchun, the lead author of China Macroeconomy Forum report on youth unemployment, believes that this problem isn’t going away anytime soon.  In another blunt warning, Liu has declared “The issue of youth unemployment will likely continue for the next decade and continue to worsen over short term.”  It bears emphasizing that Liu is no outsider or critic of the regime.  The professor has provided guidance to Beijing on the economy, including giving a lecture to top leaders in the decision-making Politburo as recently as April 2022.

This prediction should really worry Chinese leaders.  Chinese university students have historically been at forefront of demands for political change.  That goes all the way back to the post-World War I anti-imperialist May 4^th Movement, when student protest thwarted Allied plans to give Qingdao and Shandong Province to Japan as a reward for siding with them against Germany.  During the Cultural Revolution, the most militant Red Guard units hailed from Beijing’s elite Peking and Tsinghua Universities.  Students from these institutions were also at the core of the pro-democratic Tiananmen Square protest. 

These protests were largely confined to students attending top-flight Chinese universities animated by political concerns.  The employment crisis among Chinese college graduates, by contrast, could unite students from upper and lower tier institution over the shared difficulties in securing good jobs and upward social mobility.  That would truly be a nightmare for the regime. 

Besides potentially undermining China’s political and social stability, the employment crisis among college graduates threatens to deprive its economy of a crucial source of high-end talent, namely Chinese educated at foreign universities.  In 2019, just prior to the Covid Pandemic, 703,500Chinese students attended foreign universities.  Facing limited employment prospects in their mother country, many of these individuals might opt not to go back to China.  For example, one of the individuals interviewed in Li Yuan’s NEW YORK TIMES article stated that of the 13 students who were his classmates at a top British university, 5 chose to stay in the West.  All found good jobs with Silicon Valley or Wall Street firms.  Only three of the 8 who came back to China secured job offers. 

This anecdote dovetails with the experience of the daughter of one of my best Chinese friends.  This young lady got into the University of Virginia, where she studied finance.  She is now working at J. P. Morgan, after interning there while doing her studies, and is quite happy with her job and enjoying life in New York City. 

The China Macroeconomy Forum report is not just unsparing in its depiction of the employment crisis affecting Chinese youth, especially those who are college graduates.  It is also blunt in its prescriptions for this problem, emphasizing the need to boost private sector employment, which in recent years has accounted for 90% of new jobs in China.  Private sector job creation has been hammered by savage Covid lockdowns and the Government’s sudden ban on the $150 billon private tutoring industry and regulatory restrictions on high tech, which had been major conduits for employing better educated youth.  Liu and his colleagues therefore believe that simply subsidizing private jobs is a band aid solution.  “The key,” they argue, “lies in improving the protection of private property rights, to make up for people’s loss of confidence in the rule of law since the pandemic.”       

These are very brave words, indeed, as they are totally contrary to economic path Xi has sought to take China down since assuming power.  This makes me very skeptical that the advice contained in the China Macroeconomic Policy forum will be taken up by the regime (I really hope to be proven wrong here!).

After being published in early July, Renmin University put screenshots of the Forum document on Sina Weibo, with users highlighting the authors’ warnings about the political risks posed by high youth unemployment.  I will be very curious to see how long it was on Weibo before being scrubbed by Chinese internet censors.    

Heads up:  I plan on doing future blog posts on the paradoxes (and they really, really paradoxical) around highly educated youth unemployment in China, noting its interplay with the Chinese labor market and government policy.  Stay tuned.