China’s growing youth unemployment rate could trigger political problems if not properly handled, warned a prominent economist who has advised President Xi Jinping’s government.
“The issue of youth unemployment will likely continue for the next decade and continue to worsen in the short term,” said Liu Yuanchun, who has provided guidance to Beijing on the economy, including by giving a lecture to the top decision-making Politburo in April 2022.
“If not handled properly, it will spark other social problems beyond the economic arena, even becoming a trigger for political problems,” he said in a joint report published last week by a Renmin University of China think tank, China Macroeconomy Forum.
Screenshots of the 110-page document were shared on China’s Twitter-like Weibo over the weekend, with users highlighting the authors’ warnings on political risks.
Last year, Xi faced the biggest challenge to Communist Party power during his decade-plus tenure, when nationwide protests — led by students — erupted over strict COVID Zero rules, with some calling for the Chinese leader to step down.
China’s unemployment rate among those aged between 16 and 24 reached a record of 20.8% in May. The nation’s slowing economy combined with a flood of new graduates in the market are handing policymakers a challenge with few easy fixes.
China’s youth unemployment rate stems from a stagnating private sector scarred by COVID restrictions, according to the report authors, who also include Liu Xiaoguang, of Renmin University, and Yan Yan, from China Chengxin International Credit Rating Co.
“Adopting subsidy policies alone cannot fundamentally resolve the issue of insufficient private investment,” the authors wrote. “The key lies in improving the rule of law, and improving the protection of private property rights, to make up for people’s loss of confidence in the rule of law since the pandemic.”
China imposed some of the world’s harshest anti-epidemic controls. In Shanghai, authorities put its 25 million residents under lockdown for nearly two months, erecting metal barriers outside residential compounds in a bid to eradicate community infections. Pandemic control enforcers even went into people’s homes to disinfect their clothes and furniture, with residents challenging the legality and scientific value of the practice.
Liu and his co-authors identified a clear way to defuse the pressure building among unemployed young people: “A more robust economic recovery and labor market recovery are needed.”
