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One-fifth of China’s urban youth are unemployed. It is a very headache for Xi Jinping

But her situation changed dramatically this summer. Just like Cherry about to graduate from college this year and started her job, she was told by the company that her offer had been canceled because the company had to “adjust” its business and cut staff.

Her colleagues also received similar calls.

“I think it’s the pandemic,” the 22-year-old said. “Most companies have been affected by the Covid lockdown this year.”

She asked to be called only Cherry, for fear of retaliation from future employers.

A scan Beijing’s repression of the country’s private sectorstarted at the end of 2020 and its unwavering commitment to a zero-covid policyhas had a heavy impact on the economy and the job market.

“Our recent graduates were definitely the first to get fired, because we were new to the company and didn’t have much to contribute,” says Cherry.

A record 10.76 million university graduates entered the job market this year, at a time when China’s economy is losing its ability to absorb them.

The youth unemployment rate has continuously hit new highs this year, up from 15.3% in March to a record 18.2% in April. It continued to rise over the next few months, reaching 19.9% ​​in July.
The Chinese economy is in dire straits and may continue to do so for a while

The rate fell slightly to 18.7% in August, but remains one of the highest ever, data from the National Bureau of Statistics showed Friday.

That means there are currently about 20 million 16- to 24-year-olds out of work in cities and towns, according to CNN calculations based on official statistics putting the urban youth population at 107. . million. The rural unemployment rate is not included in the official data.

“This is definitely China’s worst jobs crisis for young people” in more than four decades, said Willy Lam, senior fellow at the Jamestown Foundation in Washington DC.

“Mass unemployment is a big challenge for the Communist Party,” he said, adding that providing economic growth and job stability was key to the Party’s legitimacy.

And, perhaps nowhere is there a crisis more conspicuous than in the technology sector, which has been regulation suppression by the government and sweeping US sanctions against China.

The freelance car industry was once the main source of well-paid jobs for young, educated workers in China, but big companies are now downsizing at an unprecedented scale. before.

China's tech layoffs could become a self-inflicted headache for Xi
Alibaba (TORTOISE)e-commerce and cloud giant, which recently posted steady revenue growth for the first time since going public eight years ago. It reduced its workforce by more than 13,000 in the first six months of this year.

This is the biggest layoff since Alibaba went public in New York in 2014, according to CNN calculations based on its financial documents.

Tencent (TCEHY), the gaming and social media giant, laid off nearly 5,500 employees in the three months to June. This is the biggest decline in its workforce in more than a decade, according to its financial records.

“The importance of this latest tech industry cut cannot be underestimated,” said Craig Singleton, senior fellow for China at DC-based Defense of Democracies.

The jobs crisis in the tech sector, which Chinese leader Xi Jinping has said will spur China’s next phase of development, could weaken his ambition make the country an innovation leader and global technology superpower over the next two to three decades.

“These latest cuts represent a dual threat to Beijing going forward – not only will thousands of people suddenly quit their jobs, but now these Chinese tech giants will have fewer employees are more qualified to help them innovate and scale to take on their Western competitors,” said Singleton.

“There’s a saying in the business world that ‘if you don’t grow, you’re dying,’ and that simple truth risks undermining China’s broader technological ambitions,” he added.

College students scan a QR code to search for job opportunities during a job fair at Shandong University of Science and Technology on November 16, 2021 in Qingdao, Shandong province, China.

Social instability

Technology is not the only area affected. Over the past few months, mass layoffs have engulfed booming Chinese industries ranging from private tutoring arrive Real Estate.
This could be a big problem for Mr. Xi and his government, which is already employment is a top policy priority.

“There are more and more signs that the long-standing trust between the Chinese people and the Chinese Communist Party is starting to crack, which could lead to broken social cohesion,” Singleton said.

China tries to allay alarms about mortgage boycotts and banking practices
This year, China has seen some unprecedented protests among the middle class. One the number is increasing Desperate homebuyers across the country have stopped paying their mortgages, as the real estate crisis escalates and developers are unable to complete homes in time.
The protests also broke out in central China this early year, as thousands of depositors could not access their savings at several rural banks in the region.

Experts say the issue of unemployment has come at a sensitive time for the Chinese leader. Mr. Xi is seeking a historic third term when the Communist Party holds a congress next month.

George Magnus, an associate at the China Center at the University of Oxford.

But youth unemployment would be a “major threat” to China’s economic and political stability in the long run, he added.

It is not that the government is not aware of the problem, but that so far they have not been able to come up with any concrete solutions.

Chinese Premier Li Keqiang – the number 2 figure in the Communist Party hierarchy – has this year’s voice China’s rapidly growing economy, and has repeatedly stressed the need to stabilize the “complicated and severe” employment situation.
China face & # 39;  complex and serious & # 39;  job market, Premier Li warns
The authorities have encouraged young people Pursue technology entrepreneurship or find a job in the countryside to relieve pressure.
This photo taken on August 26, 2022 shows people participating in a job fair in Beijing.

In June, the ministries of education, finance, civil and human resources and social security jointly issued a statement, asking local governments to provide tax incentives and loans, and collect attract university graduates to work as village civil servants or start businesses there.

But the government seems unwilling to address the main reason behind China’s economic slowdown this year – no Covid policy. Even as the rest of the world learns to live with Covid, China continues to shut down major cities where there have been only a handful of outbreaks. According to CNN’s calculations, at least 74 cities were under full or partial lockdown earlier this month, affecting more than 313 million people.

These restrictions are taking a toll on the world’s second-largest economy – analysts forecast growth of just 3% or less this year. Excluding 2020 – when the pandemic began in China – it would mark the country’s slowest annual growth since 1976.

Zero-Covid at what price?  Chinese researchers are delving into sensitive areas

But the Covid policy is likely to be maintained for several months, as Mr. Xi will not want to see any uncontrolled increase in Covid cases until his political future is secured. experts said.

According to Magnus, “the likelihood is that China will try and shuffle over the next few years, with a high risk of economic instability.”

For graduates like Cherry – who are still unemployed – this means giving up her dream of entering the tech industry and moving into lower-paying government jobs to settle in.

“I want to work for internet companies right after I graduate, because I’m too young,” she said.

“But because of this incident, my mindset has changed. I think it’s good to have stability now.”

Mengchen Zhang of CNN in Beijing contributed to this report.

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