Analysis: Youth Unemployment Surge Exposes Cracks in China’s Economic Transition
By Tang Hanyu and Han Wei
China’s youth unemployment hit an all-time high in August, underlining the mounting pressure on the world’s second-largest economy as millions of university graduates struggle to find a foothold in an increasingly tight labor market.
The jobless rate among people aged 16 to 24, excluding full-time students, climbed to 18.9% in August, according to data released Sept. 17 by the National Bureau of Statistics. The figure — up 1.1 percentage points from July — is the highest since the agency began tracking the indicator in December 2023. The surge coincides with a record 12.22 million new graduates entering the job market this year, 430,000 more than in 2024.
The numbers point to a worsening structural imbalance in the economy. Long-reliable white-collar sectors like tech, real estate and tutoring are scaling back amid broader structural adjustments, just as an unprecedented wave of skilled talent floods the market. The mismatch is leaving many graduates in cutthroat competition for a shrinking pool of attractive roles — or pushing them to delay entering the workforce.
With annual graduate numbers expected to exceed 10 million through 2040, the trend could leave swaths of young talent on the sidelines and weigh on economic performance for years to come.
A market in retreat
The softening appetite for new hires is showing up across job platforms. Internal data from one major recruitment site obtained by Caixin showed job postings for college graduates dropped 22% in the first half of 2025 compared with a year earlier, even as job seekers jumped 8%.
Industries that once absorbed waves of new graduates have retrenched the most. “Campus recruitment demand is still in a contraction phase, especially in real estate, internet, tutoring and financial services,” said Mao Yufei, a researcher at Renmin University’s China Institute for Employment Research.
Emerging industries — such as AI, semiconductors and new materials — are expanding but not fast enough to offset the downturn. “The demand increase from new sectors is positive, but insufficient to make up for the decline in traditional fields,” Mao said.
A fierce grind or dropping out
The resulting squeeze has created an environment of intense competition.
At a major Chinese tech firm, an AI team with three vacancies conducted over 200 interviews, according to Zhang Chao, an employee involved in hiring. Many candidates held degrees from top U.S. universities and had published in elite journals—credentials far exceeding expectations just two years ago. “They are very capable, like they are ‘plug-and-play,’” Zhang said.
Others are turning to grueling public sector exams. The 2025 national civil service exam plans to hire about 39,700 people, roughly in line with 2024. But the number of qualified applicants soared to 3.4 million — an increase of nearly 400,000 — further reducing the odds of success.
A record number of students are opting to delay job hunting altogether. At elite Chinese universities, 77.5% of undergraduates in the class of 2024 pursued postgraduate studies, up from 68.5% two years earlier, according to recruitment platform Nowcoder.
Some, disillusioned by months of fruitless job searching, are abandoning traditional career paths entirely. After months of anxiety, education major Li Yun took a part-time job at a nearby KFC. “It just felt like everyone was having a hard time,” she said, echoing a sentiment increasingly shared online.
More young people are prioritizing job stability over ambition. According to Zhaopin Group, the share of graduates favoring state-owned enterprises (SOEs) rose to 49% in 2024 from 36% in 2020. Willingness to work in China’s major cities fell to 29%, while interest in third-tier and smaller cities climbed to 22%.
The policy levers
Beijing has rolled out measures to stabilize the market. The government is offering subsidies of up to 1,500 yuan ($205) per person to employers hiring jobless youth. State-owned firms have also been instructed to boost graduate hiring beyond last year’s levels.
Zhaopin data show SOEs raised their share of graduate recruitment from 4.7% in July 2024 to 5.3% in July 2025.
Still, economists warn of a phenomenon known as “jobless growth” — when GDP rises but hiring, especially for youth, lags behind. Mao noted that the employment elasticity of China’s economy is shrinking. Even with GDP growth around 5%, hiring data suggest the number of jobs is not keeping pace — particularly for recent graduates.
Several structural shifts are partly to blame: the rise of automation and AI, labor-light high-tech industries, and a turn toward outsourcing and flexible contracts to contain costs — all of which reduce long-term job creation, said Mao.
A more troubling sign is that some youth are dropping out of the labor force entirely. Su Lifeng, a researcher at the University of International Business and Economics, pointed to a rising share of “NEETs” — young people Not in Education, Employment or Training. Her data show China’s NEET rate among 16- to 34-year-olds rose to 16.1% in 2022 from 11.5% in 2018.
Su warned that the problem is shifting from a temporary phase for individuals to a systemic, long-term drag on the economy. “If not effectively addressed,” she said, “it will have lasting consequences for growth and social stability.”
Contact reporter Han Wei (weihan@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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