Data shows China's latest worsening economic problem: Youth unemployment

China’s youth unemployment rate climbed to 17.1 percent in July, according to official data, marking the highest level recorded this year.

The figure represents a significant increase from June’s revised rate of 13.2 percent among 16- to 24-year-olds, a demographic that no longer includes students following Beijing’s adjustments to its unemployment calculations.

This surge in youth joblessness adds to the growing list of economic challenges facing the world’s second-largest economy.

The youth unemployment rate had previously peaked at 21.3 percent in June of the previous year before Chinese authorities suspended the publication of the figures and subsequently altered their methodology.

The current numbers, although alarming, may not fully capture the extent of the issue, as they are based solely on urban data and exclude significant portions of the population.

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Wider economic struggles

The increase in youth unemployment is occurring alongside broader economic difficulties in China. The country’s heavily indebted property sector continues to weigh on the economy, while trade tensions with the West exacerbate uncertainties.

The overall unemployment rate in China stood at 5.2 percent in July, showing little change from the previous month. Among 25- to 29-year-olds, the jobless rate edged up slightly to 6.5 percent from 6.4 percent in June, further indicating the strain on China’s labor market.

China’s post-pandemic recovery has been less robust than anticipated, despite the lifting of stringent Covid-19 restrictions more than a year and a half ago. Industrial production growth slowed in July, dampening hopes for a swift economic revival.

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These challenges, combined with rising unemployment, are eroding investor confidence and presenting new obstacles for Chinese policymakers.

Government response 

In response to these growing concerns, Chinese leaders have emphasized the need to address youth unemployment as a “top priority.” President Xi Jinping highlighted the issue in May, urging swift action to mitigate the impact on the nation’s younger population.

The problem is particularly acute as 11.8 million students graduated from university in June, intensifying competition for a limited number of available jobs.

The Chinese government has introduced a series of measures aimed at stimulating economic growth, including 20 new policies announced earlier this month focused on boosting domestic consumption. However, the efficacy of these initiatives remains uncertain, as the country grapples with persistent economic headwinds.

As China confronts this rising tide of youth unemployment, the challenge of reinvigorating its economy becomes ever more pressing. The government’s ability to implement effective solutions will be critical in determining the country’s economic trajectory in the coming months.

With inputs from AFP