China’s youth unemployment soars amidst a faltering post-pandemic recovery

China is facing a new record high in youth unemployment as its post-pandemic recovery stumbles. Official data reveals that the unemployment rate among 16- to 24-year-olds in urban areas reached 21.3% last month. This comes as the country’s second-largest economy only grew by 0.8% in the second quarter of the year, raising concerns about the sluggish pace of growth and the need for new measures to boost the economy.

“China’s National Bureau of Statistics” claims that the data indicates a positive momentum of recovery, but the 6.3% annual growth in the second quarter fell short of analysts’ expectations. The decrease in global demand for Chinese goods, along with concerns about mounting local government debt and the housing market, have contributed to these challenges.

Youth employment is being closely monitored due to the record 11.58 million university graduates entering the job market this year. The unemployment rate for urban youth has been steadily rising for months, mainly due to a mismatch between graduates’ skills and the available job opportunities. Authorities anticipate a continued rise in youth unemployment in the coming months, with a peak expected around August.

While unemployed young people currently constitute just 1.4% of the potential workforce in urban areas, economists are emphasising the need for more direct policy responses due to the vocal nature of this population online.

China began reporting youth unemployment figures in 2018 but does not currently release data on the employment status of young people in rural areas. In March, Chinese Premier Li Qiang acknowledged the difficulty of achieving the country’s 5% economic growth target for the year but expressed optimism about the stabilising and improving economy.

To stimulate economic growth, “China’s central bank” recently cut interest rates for the first time in nearly a year. However, experts believe that the government still has additional tools at its disposal to further stimulate the economy if the situation fails to improve.