China’s record high 21% youth unemployment could actually be as high as 46.5%. Blame fake jobs and 16 million workers ‘lying flat’

China’s post-COVID recovery has been labored compared with what most Wall Street analysts anticipated. The country’s ailing property market, surging local government debt, and weak consumer spending have even forced Beijing to lower interest rates and offer targeted stimulus in hopes of boosting the economy.

Then there’s the country’s sky-high youth unemployment rate. China’s newest entrants to the workforce have been struggling with a difficult job market for years, but since COVID, the situation has deteriorated dramatically.

In June, the unemployment rate for Chinese ages 16 to 24 hit a record high of 21.3%, according to China’s National Bureau of Statistics (NBS). That’s compared with a 4.1% unemployment rate for those ages 25 to 59. 

The official statistics don’t paint a rosy picture, but the reality on the ground may be even worse, according to Peking University economics professor Zhang Dandan. Because China calculates its unemployment rate by including only people actively seeking work, as opposed to the U.S. where those available for work are also counted, Zhang believes the true unemployment rate could be as high as 46.5%.

In an article for Chinese financial magazine Caixin, she explained that there are 16 million young Chinese workers who have essentially taken themselves out of the labor market—something known as “lying flat”—and therefore aren’t being counted in the unemployment statistics, Japan’s Nikkei first reported.

Similar to the “quiet quitting” movement in the U.S., Chinese youth have taken to “lying flat,” or doing the bare minimum and adopting a minimalist lifestyle, as a way to reject the societal pressure to overwork in China. 

The youth unemployment rate has surged so much amid the new fad that some Chinese parents have turned to unusual solutions, including paying their adult kids to be “full-time children.” But President Xi Jinping and the Communist Party have taken a different approach, calling on young, educated Chinese to take on blue-collar roles they feel overqualified for and “actively seek hardship.” Beijing also put forward a 15-point plan in May to boost youth employment that included measures like increasing support for worker retraining and the addition of new government jobs. 

China’s Ministry of Education has also taken a hard stance against universities in an attempt to lower the country’s unemployment rate, but so far, the decision may have created more problems than it has solved.

Another reason to question the unemployment data

In its attempt to reduce the unemployment rate for college graduates, the Ministry of Education has warned that any college majors that have employment rates lower than 60% for two years in a row could be canceled.

The majority of Chinese universities are state-funded, which means the government can put a lot of financial pressure on administrators to achieve its goals. That pressure led some schools to force graduates to falsify employment records, the South China Morning Post reported Monday.

“I think the actual state of youth unemployment in China could be worse than the data suggests, as colleges have incentives to inflate the employment rate,” Henry Gao, a law professor at Singapore Management University, told the SCMP. “There have been reports of colleges offering jobs to their own graduates just to paper over the data.”

The situation is now so bad that the Ministry of Education has begun cracking down on universities, promising to punish people who falsified employment records as a part of a sweeping investigation into the accuracy of employment data.

“Universities should strictly uphold the baseline of genuine and accurate employment data, rigorously review the employment materials of each graduate, and place special emphasis on verifying data related to ‘flexible employment,’” the ministry said in a statement.

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