Red alert Too few jobs, not enough tax receipts and a weak safety net

When finding a job feels as unlikely as winning the lottery, playing the actual lottery may seem like a more productive use of time. In the first half of 2023, faced with a struggling economy, Chinese consumers spent 273.9bn yuan ($37bn ) on lottery tickets, an increase of more than 50% on the same period in 2022.

- Amy Hawkins

 

It’s just the latest symptom of an economy in distress. A record high youth unemployment rate of 21.3% in June prompted the government to stop publishing data on the issue – along with other measures such as the consumer confidence index – all of which showed that China’s economy was struggling.

Several factors have contributed to the unusually high youth unemployment rate. Education, real estate and technology – industries that graduates previously flocked to – have been hit by a regulatory storm that annihilated millions of jobs. And during the Covid-19 pandemic, more students stayed in education while the jobs market was all but frozen, leading to a pent-up supply of graduates on the jobs market.

But the bigger problems for the Chinese economy may be structural. Most of the people in the youth unemployment cohort are not college graduates but school leavers who are unable to get the types of service-sector jobs that previously kept China’s cities buzzing. Millions of would-be hospitality workers, security guards, couriers and nannies are unemployed. Educated, creative college graduates going without work is a problem for a “politically significant part of the workforce”, said Eli Friedman, a professor who focuses on Chinese labour issues at Cornell University, but the fact that people are not finding more low -end jobs is the “big concern”.