China’s Youth Unemployment Crisis: Impact of Xi Jinping’s Crackdown on Private Sector

Experts suggest that rising joblessness in China could be the result of Xi Jinping’s crackdown on the private sector. The data published now is not even close to revealing the real situation of joblessness in China. After questionable methodological revisions, China’s first response to counter its record-high youth unemployment rate was to stop publishing the data altogether. After tampering with the calculation methods for six months, the data was published again, creating a false image of normalisation. But China’s ‘questionable methodological revisions’ yet again proved useless as figures are again declining.

China’s youth unemployment rate was at a record high of 21.3 per cent last year. As a response, the authoritarian regime stopped publishing the data. After tampering, for six months, China’s National Bureau of Statistics excluded students from the employment data by December last year. In July, after several months of small declines, the youth jobless figure rose sharply again to 17.1 per cent.

In China, structural issues, COVID-19 post-pandemic recovery and trade tensions with the West were destroying the Chinese economy, but just as crippling for the economic growth and employment prospects was the crackdown by President Xi Jinping on the technology sector, real estate and private education sectors during 2020-21.

A senior associate at the public-policy advisory firm Global Counsel based in Singapore, Jiayu Li, said that even the previous data excluded millions of rural workers, who face greater challenges in securing full-time employment than those in urban areas. ‘The official figures don’t accurately capture the true situation on the ground. Even after questionable methodological revisions, the numbers are still rising, highlighting the gravity of the problem,’ Li said.

The Chinese economy no longer expands at double-digit annually, projections suggest a growth rate of 5 per cent this year but the country can’t create enough jobs for its 12 million graduates and millions of school leavers that enter the workforce every year. China’s tech giants and their monopolies were targeted by Xi Jinping’s reforms who lost more than a trillion dollars in market value. Additionally, the property sector also witnessed a collapse, taking the life savings of tens of millions of people along with it. Moreover, China’s education-technology sector, which offered private tuition to an estimated 75 million students, was destroyed inevitably followed by mass layoffs affecting young workers in China.

Diana Choyleva, the chief economist at the London-based Enodo Economics, said ‘Xi’s crackdown sent a massive chill through this sector. Although tutoring jobs did not dry up completely, they became much more unstable and unreliable, reducing one avenue that underutilized graduates had used to mitigate their diminishing economic prospects.’

Another major concern for Chinese employees was the difference between expectations and reality because young people in China continue to shun blue-collar jobs to compete for high-paying white-collar positions. But Chinese media cited a 2023 study by Beijing’s Capital University of Economics and Business that found that about half of the country’s 400 million manual workers are above the age of 40.

Employment in the gig economy which is often dependent on digital platforms for food delivery, ride-sharing or social-media influencing, has become oversaturated. According to the report, 200 million employees in China make a living through roles in the gig economy. Choyleva also claimed, ‘How can the private sector drive innovation while entrepreneurs are unwilling to take the risk to start a business? Long-term you lose out on companies that could have spurred massive employment for young people, and the multiplier effects they would have had for the country.’