China hides youth unemployment stats and wants to divert attention from the struggling economy.

China hides youth unemployment stats and wants to divert attention from the struggling economy.

China’s Youth Unemployment Crisis: Incorrect Data and Suppressing Bad News

China’s Unemployment Crisis

China’s youth unemployment crisis is reaching dire levels, as the country’s statisticians announce a temporary pause in releasing joblessness rates for urban individuals aged between 16 and 24. The National Bureau of Statistics is conducting further research on whether students looking for a job before graduation should be counted in the labor statistics. This comes as 21% of individuals in this age group were unemployed in June, following record-high unemployment rates set in the preceding months.

The situation is expected to worsen as an estimated 12 million graduates start entering the workforce in July. The Chinese government is increasingly concerned about the growing youth unemployment crisis, driven by struggles in sectors that traditionally employ younger workers such as construction, manufacturing, and the technology sector. China’s real estate crash, weak domestic consumption, sluggish foreign trade, and regulatory crackdowns have all contributed to the decline in job opportunities for young people.

In an effort to address the issue, Chinese officials are offering assistance and subsidies to encourage companies to hire young graduates. They are also promoting job opportunities in rural areas, urging younger jobseekers to consider opportunities outside major cities. However, even the official stance on the matter is turning pessimistic. Chinese President Xi Jinping drew criticism on social media for suggesting that young Chinese may have to “eat bitterness” to find success, implying the need to endure hardship.

The accuracy of China’s youth unemployment data is a subject of debate. Some experts believe that the current measures underestimate the actual joblessness among young people. Wang Mingyuan, a researcher at the Reform and Development Institute of Beijing, argues that China’s threshold for employment is too low, counting individuals working only one hour a week. This approach fails to account for both migrant workers and those involved in the gig economy.

Adding to the complexity, Zhang Dandan, a professor of economics at Peking University, estimates that the youth unemployment rate could be as high as 46.5% if “lying flat” individuals were included. These are young Chinese who have voluntarily chosen to remove themselves from the labor force. Most commonly used measures of unemployment exclude those who are not actively pursuing employment. Education officials have even begun investigating universities to ensure graduates are not being asked to falsify their employment status.

China’s economic recovery is also facing significant challenges. Industrial production and retail sales have reported below-expectations growth, indicating a slowdown in economic activity. Credit data from the People’s Bank of China reveals a drastic drop in new loans offered in July, compared to the previous month and the previous year. Trade is also suffering, with July exports declining by 14.5% compared to the previous year.

In response to the worsening economic situation, Chinese authorities have suspended the publication of certain poorly-performing metrics and have clamped down on outbound data flows. Due diligence and expert network firms have been raided, often on national security grounds. Furthermore, there are reports of pressure on analysts, ANBLEs (academics, NGOs, businesses, and government officials), and other commentators not to share negative news about the Chinese economy. They are encouraged to use euphemisms like “subdued inflation” instead of discussing the risk of deflation. Lawyers are being directed to frame China’s economy as “evolving” rather than undergoing “adverse changes.”

The combination of China’s youth unemployment crisis and worsening economic indicators highlights the need for careful analysis and a nuanced understanding of the situation. The progressive steps taken by the Chinese government to address this crisis demonstrate a recognition of the problem. However, discrepancies in data accuracy and the suppression of negative news raise further concerns about transparency. As China navigates these challenges, a comprehensive and balanced assessment of its economic landscape is crucial for both domestic and international stakeholders.

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