China’s youth unemployment rate soars as recovery falters

Youth unemployment in China has hit a new record as post-epidemic recovery in China falters.

Official figures show that the unemployment rate for 16- to 24-year-olds in urban areas rose to 21.3% last month.

It comes as the world’s second-largest economy grew just 0.8% in the three months to the end of June.

Analysts say the weak pace of growth has raised expectations that the authorities may soon announce new measures to boost the economy.

China’s National Bureau of Statistics said the data “showed a good momentum of recovery”.

According to official figures released on Monday, China’s economy grew by 6.3% year-on-year in the second quarter. It outpaced growth in the first quarter but missed analysts’ expectations.

“The disappointment is particularly evident in retail sales and housing investment,” Qian Wang, chief Asia Pacific economist at investment firm Vanguard, told the BBC.

“This, along with previous reports on trade, inflation and credit, reaffirmed our view that underlying growth momentum remains very weak,” she added.

Global demand for Chinese goods has fallen dramatically. There are also concerns about ballooning local government debt and the housing market.

Economists are watching youth employment closely as 11.58 million university graduates are expected to enter China’s job market this year.

The unemployment rate among urban youth has been rising for several months. This is due to factors including a mismatch between what graduates have been trained to do and the jobs currently available.

The authorities acknowledged that youth unemployment will likely continue to rise in the coming months, before peaking around August.

Dan Wang, chief economist at Hang Seng Bank in China, estimated that unemployed youth make up only 1.4% of the potential labor force in urban China.

However, she told the BBC that the issue of youth unemployment “requires more direct policy responses, because this group of the population has a loud voice online”.

She added that “their expression of dissatisfaction with the current situation may lead to a greater loss of confidence in the economy.”

China began publishing youth unemployment figures in 2018. However, it does not currently publish data on the state of youth employment in rural areas.

In March, Chinese Premier Li Qiang said the country needed to redouble its efforts to meet the 5% target for economic growth this year.

He said the goal “will not be easy” to achieve even though the economy “stabilizes and picks up again”.

Last month, China’s central bank cut interest rates for the first time in nearly a year to encourage more spending. But experts say the government still has more weapons in its arsenal to stimulate the economy if the situation fails to improve.