Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China’s remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and “jump into the sea,” as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.

Chinese economists worry that waning entrepreneurial zeal could hobble China’s ability to remake its economy and reach the ranks of wealthy nations. “The current education system does not produce people who are innovative,” says Li Hongbin, a Tsinghua University economist who specializes in education and conducted some of the surveys. “That makes it harder for the country to reach its long-term goal of building an innovative society.”

For many, though, the choice is less between state and start-up than accepting factory jobs or holding out for white-collar work.

In a second article, Davis focuses on the sacrifices made by one rural northern family to send their son to college, and the lingering question of whether the investment will pay off financially:

Four years ago, Gao Shangming was convinced that his son Yueqing needed to remain in the family’s one-room apartment and help harvest corn rather than go to college. “Our financial situation wasn’t good,” the 50-year-old peasant farmer says.

But Gao Yueqing was determined to escape the dusty north China mountain village of 200 households where nearly all young people either become farmers or migrate to nearby cities to work in restaurants. His father’s relatives talked up young Gao’s case, as did a respected high-school teacher who told the elder Gao how hardworking his son was.

The clincher: “He told me, ‘If I let him get a college degree, he’d make more money,’” the elder Gao recalls.

[…] Gao Yueqing is set to graduate this June with a degree in accounting, the most practical major he and his father could agree upon. But the younger Mr. Gao, like many Chinese college students, is finding it hard to nail a job, especially one that pays decently.

See also ‘In China, Betting It All on a Child in College‘, via CDT.

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Post tags: civil service, entrepreneurs, graduates, job market, labor market, private sector, state-owned enterprises, unemployment
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Wu Yiebing has been going down coal shafts practically every workday of his life, wrestling an electric drill for $500 a month in the choking dust of claustrophobic tunnels, with one goal in mind: paying for his daughter’s education.

His wife, Cao Weiping, toils from dawn to sunset in orchards every day during apple season in May and June. She earns $12 a day tying little plastic bags one at a time around 3,000 young apples on trees, to protect them from insects. The rest of the year she works as a substitute store clerk, earning several dollars a day, all going toward their daughter’s education.

[…] Her parents’ sacrifices to educate their daughter explain how the country has managed to leap far ahead of the United States in producing college graduates over the last decade, with eight million Chinese now getting degrees annually from universities and community colleges.

But high education costs coincide with slower growth of the Chinese economy and surging unemployment among recent college graduates. Whether young people like Ms. Wu find jobs on graduation that allow them to earn a living, much less support their parents, could test China’s ability to maintain rapid economic growth and preserve political and social stability in the years ahead.

Reading the whole article is strongly recommended.

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Post tags: Ant Tribe, college entrance exam, college graduate joblessness, college students, education, job market, jobs, rural children, rural poor, rural urban divide, unemployment
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Wang Zengsong is desperate for a steady job. He has been unemployed for most of the three years since he graduated from a community college here after growing up on a rice farm. Mr. Wang, 25, has worked only several months at a time in low-paying jobs, once as a shopping mall guard, another time as a restaurant waiter and most recently as an office building security guard.

[…] “I have never and will never consider a factory job — what’s the point of sitting there hour after hour, doing repetitive work?” he asked.

Millions of recent college graduates in China like Mr. Wang are asking the same question. A result is an anomaly: Jobs go begging in factories while many educated young workers are unemployed or underemployed. A national survey of urban residents, released this winter by a Chinese university, showed that among people in their early 20s, those with a college degree were four times as likely to be unemployed as those with only an elementary school education.

See more about China’s “ant tribe” of un- or underemployed graduates via CDT.

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Post tags: Ant Tribe, college graduate joblessness, factory workers, graduates, manufacturing, unemployment, white collar
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The Gini coefficient, an index measuring income inequality, was 0.61 in 2010, based on a survey of 8,438 households by the Survey and Research Center for China Household Finance, a body set up by the Finance Research Institute of the People’s Bank of China and Southwestern University of Finance and Economics. The survey also estimated the urban jobless rate in July 2012 was 8.05 percent, almost double the official figure.

[…] “China’s wealth gap is so prevalent between regions, sectors, and urban and rural that it’s impossible to see a meaningful decline in the Gini coefficient in the short term,” Gan Li, director of the Chengdu-based center and a professor at Texas A&M University in College Station, Texas, said at a briefing in Beijing today. “Depending on market forces alone can’t resolve the gap and China must change the structure of income distribution and rely on massive fiscal transfers to narrow such a yawning disparity.”

Higher fiscal revenue and a bigger share of state-owned enterprises’ profits could give the government about 3.8 trillion yuan ($610 billion) a year to spend on income redistribution, said Gan, who has a doctorate in economics from the University of California at Berkeley. In the long run “China needs to beef up funding for education and reduce inequality of opportunity to lower the income gap,” he said.

Although higher than expected, the new figure may still be too low. From Chen Dujuan at Global Times:

Zheng Xinye, a professor at Renmin University of China, told the Global Times Sunday that the real Gini coefficient may be even higher than 0.61, since the super-rich are hard to reach for surveys.

“The widening income gap was caused by restrictions that kept small and medium-sized companies from entering high-profit sectors, as well as by employment discrimination,” Zheng said. Data showed that the wage gap between finance and agriculture, which earn the highest and lowest wages respectively, has widened to a ratio of 4.2 in 2010 from 2.24 in 1997.

Zheng said that low standards for labor and environmental protection have increased the wealth of the rich at the cost of the health and income of the poor.

[…] Greater urbanization will ease the income gap, Pan Jiancheng, deputy director-general of the China Economic Monitoring & Analysis Center of the National Bureau of Statistics (NBS), said at the survey release press conference, noting that China needs to boost economic transformation and improve social security.

The Gini coefficient is not a definitive or comprehensive measure of inequality, however, its widespread use arising in large part from its simplicity and convenience. Mark Gimein described the measure’s limitations at Slate (via Trey Menefee) in 2008:

[…] Measuring inequality, or what most people think of as inequality, is not simple. And, perhaps more importantly, the standard measure of inequality tells us a lot less about poverty than we might think or hope.

To see why, let’s look a little bit into the mathematics of inequality. The Gini index is a number that expresses the proportion of income that goes to people on various steps on the economic ladder. In a country in which everyone has exactly the same income, the Gini coefficient will be zero. On the other hand, in a country in which all the income goes to one person, the Gini coefficient will be 1, and the Gini index will be 100 (technically, it’ll never reach the perfect 100, but it’ll be incredibly close). In real life, the United States has a Gini index of 45, and Norway’s is 28.

[…] The problem here is that Gini index alone does not yield enough information to indicate what proportion of a country’s people are poor—even if we know the country’s total income. A measure omitting that crucial concept doesn’t get to what people really mean when they talk about inequality. Take it out, and most of the rhetoric about inequality loses its soul.

Comparing the Gini coefficients of countries at different stages of development is also problematic, as Tsinghua University economist Wei Jie explained to People’s Daily Online in 2006.

At The Wall Street Journal, Tom Orlik described the study’s findings on unemployment:

The survey represents the most ambitious attempt yet to map China’s labor markets, household income and asset ownership—areas where the official data are widely regarded as inaccurate or deficient.

Employment is a hot-button issue for China’s ruling Communist Party, with the risk that high levels of joblessness could trigger destabilizing unrest. At the end of 2008, severe job losses for migrant workers helped prompt the government to unleash a massive stimulus package.

[…] Despite a significantly higher rate of unemployment than reported by the government,China’s labor market still appears to have weathered 2012′s growth slowdown relatively well. A loss of around 4.5 million jobs for China’s migrant workers in the past year has taken their unemployment level to 10 million, still well below the 23 million out of work in 2009.

That the official figure seems inaccurate comes as no great surprise. Last month, Caixin’s Zhang Huanyu pondered the official urban unemployment rate’s mysterious steadiness since the start of 2010:

The urban unemployment rate announced by the government has remained at 4.1 percent from the start of 2010 to June 30. Even during the worst of the global financial crisis in 2009, the figure climbed to only 4.3 percent.

When I talk to government officials and scholars, they unintentionally reveal the importance they attach to the statistic. But the fact the figure barely changes is a sign its accuracy can be doubted. Unfortunately, this is true of many statistics released by government agencies in China.

[…] The National Bureau of Statistics once promised that starting in 2011 it would release more accurate unemployment figures, but so far we haven’t seen them.

In March, bureau director Ma Jiantang was asked about the unemployment rate and said: “From the research we have done, the gap between our data and the real situation is narrowing.”

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Post tags: gini coefficient, income gap, inequality, migrant workers, social stability, unemployment, urban population, urban rural divide, wealth gap
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Investors still believe consumption will carry the Chinese economy past its current difficulties. And on the surface, China’s shoppers appear resilient. The National Bureau of Statistics reported that retail sales increased 13.2% in August year-on-year. Moreover, the People’s Bank of China is apparently expecting a stellar National Day. Days ago, the central bank completed the biggest weekly net injection of cash in China’s history—365 billion yuan—to meet expected demand during the week-long holiday.

Yet even official statistics are starting to reveal the slowdown in consumption. For one thing, the current retail-sales figures represent a deterioration from the second half of last year, when growth ranged from a low of 17.0% in August to a high of 18.1% in December. Moreover, current growth rates are also below those in the beginning of this year: the aggregated January-February period clocked in at a still-healthy 14.7%, and March posted a 15.2% gain.

The downward trend in the figures becomes even more worrying when you strip out of them inflation and exclude government procurement and store inventory, which are inexplicably included. The growth of “retail sales” in China, at least as we think of the term, is probably in the low single digits at the moment.

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Post tags: consumers, economic slowdown, hard landing, inflation, retail sales, unemployment
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The problems in the export belt have triggered the ongoing series of strikes and protests, often numbering a thousand workers or more, in both the Pearl River delta in the south and the Yangtze River delta in the middle of the country. These large-scale demonstrations, in great cities like Shanghai and out-of-the-way locations such as Anji, are occurring when workers do not normally take to the streets.

Some factory owners say that conditions are more difficult now than they were in 2008, at the beginning of the global downturn. If recent history is any guide, the protests in China are about to become even larger, more violent, and more numerous after the country’s marks the Lunar New Year next month.

And perhaps that is why at the beginning of this month Zhou Yongkang, the Communist Party’s leader in charge of internal security, warned that unrest caused by China’s faltering economic outlook threatened the country’s political system. His remarks indicate that the Chinese economy faces severe challenges, despite the picture painted by November’s robust trade statistics.

An NTDTV report today notes the wave of industrial disputes that have hit China as factories report a sharp drop in orders. With export expansion waning and possibly falling to zero next year, the Ministry of Commerce announced the government’s intention to take action as Chinese officials convened in Beijing for a Central Economic Work Conference to map out economic policy in 2012. From China Daily:

These measures include supporting exporters’ drive to tap emerging markets, approving the establishment of 59 export bases, strengthening traditional industries and helping exporters in the central and western regions expand overseas.

Conditions next year “will be more complicated and severe for Chinese exporters, and the task for the Chinese government in maintaining stable export growth will be harder” said Zhong Shan, vice-minister of commerce, during a foreign trade meeting in Beijing.

His remarks came after the General Administration of Customs released November trade figures on Saturday. Export growth continued to decelerate, the figures show, and overseas sales were up just 13.8 percent year-on-year, the smallest gain since 2009.

“Several difficulties and uncertainties do and will exist, and we will have measures in place to stabilize exports as noted in China’s 12th Five-Year Plan covering the 2011-2015 period,” Zhong said.

See also “Is Winter Coming for China’s Economy” via CDT.

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Post tags: economic slowdown, exports, imports, manufacturing, mass incidents, unemployment
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The Ministry of Education urged universities around the country to enroll fewer students in programs that usually lead to low employment.

Student intake in these unpopular courses will be downsized, even the programs canceled altogether, if less than 60 percent graduating in these subjects in two successive years failed to find work, said the ministry.

This is the latest move of the ministry in ensuring employment for university graduates, whose number will reach 6.8 million in 2012, an increase of 200,000 since the current year.

The Wall Street Journal points to disapproval from those who see this initiative as contradictory to China’s goal of becoming an innovator in science and technology:

Many university professors in China are unhappy with the Ministry of Education’s move, as it will likely shrink the talent pool needed for various subjects, such as biology, that are critical to the country’s aim of becoming a leader in science and technology but do not currently have a strong market demand [...]

[...] Education has become a heated topic in China, as the country looks to propel the rise of its own companies and its own technologies. To succeed in that quest, the government has said, the country must produce more innovators.

However, one reason for the abundance of unemployed youth is that, while China’s college students are being academically trained, the job market is not yet demanding post-secondary education. The University World News explains that the structure of Chinese society still favors the skilled laborer over the academically trained:

[...] economists point to much deeper structural problems, particularly the significant size of China’s manufacturing sector compared to its service sector – the main employment area for graduates.

According to education and labour market expert Mao Shu-chao, a former vice-president of the Shanghai Education Research Institute, the 2.5 million white-collar jobs generated by the Chinese economy each year is not enough to absorb the 6.3 million graduates produced by the countries’ universities annually.

He has said skilled migrant workers without degrees, in comparison to graduates, have almost 97% employment, and has been advocating for a greater focus on vocational education rather than university degrees, particularly for students outside the biggest towns

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Post tags: Ant Tribe, education, unemployment
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The survey, released by the state center for disease control and the Beijing Huilongguan Hospital, showed that suicide was the fifth leading cause of death in China – but the first among the teenage and young adult group aged between 15 and 34 ….

Experts said the main reason for teenagers and young adults to commit suicide was because they suffered a great deal of pressure in their lives, leading to mental problems.

Teenagers’ pressure stemmed from study burdens, troubled relationships and job-hunting woes, while young adults faced problems like work pressure, financial burdens and securing proper child education, the study found.

The survey’s finding of 250,000 suicides per year is equivalent to around 18.5 per hundred thousand people. (For see international comparison see, cautiously, Wikipedia) China Daily reported almost identical figures in 2007: 250,000 suicides per year, and two million attempts (based on 2003 data from the health ministry), with suicide the leading cause of death among the young. The China Daily article notes the phenomenon of relatively widespread suicide among un- or underemployed young graduates, which has attracted particular attention: see also a Telegraph report from 2009.

Source: Suicide ‘the leading cause of death’ for young Chinese – Shanghai Daily

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Post tags: Ministry of Health, suicide, unemployment
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For all its glitter and shimmer, the China model has some clear faultlines that are responsible for China’s many social and political problems. For example, without accountability, the authoritarian state’s ability to make quick decisions has often come with high economic and environmental costs, leading to irrational and distorted investment, waste of resources and environmental deterioration. In addition, without an opposition party to keep watch on privileged state officials, a combination of authoritarian politics and the market economy has produced corrupt crony capitalism (权贵资本主义) in which power and money are closely connected. Acting to protect and enrich specific interests, the state has come to infringe upon ordinary people’s rights. Arbitrary land acquisitions are prevalent and workers have to endure long hours and unsafe conditions, causing discontent within society.

China now has one of the most unequal income distributions in the world, with a Gini coefficient of 0.50 in 2009, even higher than the United States, at 0.46. This alarming inequality has come as China has dismantled its social welfare structures, leaving hundreds of millions of people with minimal or no provision of healthcare, unemployment insurance, and other social services. These growing gaps are at the root of social unrest, that threatens political stability, an accepted pre-condition for economic development. Coercive force has been deployed with increasing frequency to suppress popular unrest. This year, the financial cost of ‘maintaining stability’ (维稳) is estimated to have outstripped the size of the defence budget. The dramatically rising costs of maintaining internal control have raised questions about the sustainability of the China model, which is based on the wrong assumption that economic growth trumps all else. If the government takes care of economic growth the assumption is, people will be willing to give up all moral and other demands.

See also: Is the ‘China Model’ Failing? via CDT. The China Model was a recurring theme in The Economist’s recent Special Report on China.

Source: The China model and the authoritarian state – East Asia Forum

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Post tags: China model, corruption, environmental degradation, healthcare, income gap, land grabs, stability, unemployment, United States, welfare, working conditions
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Anything is possible, I suppose, but the very idea of Chinese activists being so inspired by the riots in Egypt that they’d try to implement the same tactics in China is so absurd it’s laughable.

The only renowned activist in China who’s been pushing for democratic reforms is named Liu Xiaobo, and he’s sitting alone in a jail cell. And most Chinese people believe that’s where he belongs. Not only did he never garner anything like mainstream popular support, he’s considered a “criminal” and a “traitor” by most Chinese citizens who, unfortunately, only know of Liu through the government-owned Chinese media. The Chinese are in no mood to follow anti-government activists into the streets to battle the army and the police.

Most Chinese, as we’ve said here many times, have little to no interest in democratic reforms. The vocal few who do quickly become marginalized or silenced altogether. A major factor behind both the Tunisian and Egyptian conflagrations was poverty and massive unemployment. Recent explosions in the price of food helped bring these crises to a head ….

China has done a far better job than Egypt and Tunisia in terms of keeping people employed and placated. Its public works projects and subsidies of Chinese businesses have helped keep unemployment in check and, unlike in Tunisia, the mood in China (at least when I was there last a few months ago) was wildly optimistic. Tunisia and Egypt are poor, China is rich. Massive riots are virtually unthinkable. Today’s Chinese have little appetite for chaos.

ChinaGeeks’ Charles Custer responds:

Certainly, Beijing is not Cairo. But protesters in Cairo weren’t following some famous pro-democracy activist into the streets, so I’m not sure Liu Xiaobo is an apt comparison to draw here. People in China may consider Liu a criminal, but the Prime Minister just encouraged more people to come out and air their complaints about the government, the idea that Chinese people might act more or less on their own isn’t absurd.

And while I haven’t followed Egypt closely before today, I don’t think China has done as great a job placating everyone in the last few months as you seem to suggest. Inflation is still a problem everyone is pissed about, but the widening gap between rich and poor might be equally explosive. And Qian Yunhui, or the 77 RMB lady, are just the most recent examples that Chinese people are more cynical than ever before about the government.

I would be shocked to see massive anti-government protests calling for a new government like the ones in Cairo. But I wouldn’t be too surprised to see another “Li Gang” incident spark some real unrest about inflation, housing prices and the wealth gap, given the right circumstances.

The article and comments thread as a whole are recommended reading.

See also: China Blocks ‘Egypt’ on Microblogging Service, and the original question from the White House press conference, together with Gibbs’ response:

Q: Can I ask you about China? It seems like a leap, and geographically it is, and culturally it is, but when President Hu was here there was a lot of discussion about human rights and about the need as you become more powerful to consider elements of free society or rule of law. Does the U.S. believe — or do you think that China should be concerned in any way about what’s happening in Egypt? Or do you think it’s — they’re such completely different societies and that this is mostly an Arab-Muslim thing at this point?

MR. GIBBS: Let me make sure I understand. Are you talking about our posture toward China or —

Q: No, I’m talking about the notion of citizens around the world in societies with —

MR. GIBBS: Let me —

Q: — that don’t feel are open enough deciding to take to the streets?

MR. GIBBS: I think that — again, I think it would be — if I’m not going to generalize across a region, I probably shouldn’t generalize across several regions.

Q: I just want to know about one country, not —

MR. GIBBS: No, no, I understand. But to discuss this as it relates to one other country would be to do — would be to dip my toe into the pool of generalization, which I’m certainly not going to do.

I will say this. Again, I think the issues that the President talked with President Hu of China about and the issues with which President Hu told all of you that there was work to be done, that is the case regardless of what happens in any other country in the world. And the President has expressed his concerns about that, and I think you saw those concerns quite honestly expressed by President Hu.

This comes 31 minutes into the video (transcript here).

© Samuel Wade for China Digital Times (CDT), 2011. | Permalink | 5 comments | Add to del.icio.us
Post tags: Egypt, food prices, inflation, Liu Xiaobo, revolution, unemployment
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Often the first from their families to finish even high school, ambitious graduates like Ms. Liu are part of an unprecedented wave of young people all around China who were supposed to move the country’s labor-dependent economy toward a white-collar future. In 1998, when Jiang Zemin, then the president, announced plans to bolster higher education, Chinese universities and colleges produced 830,000 graduates a year. Last May, that number was more than six million and rising.

It is a remarkable achievement, yet for a government fixated on stability such figures are also a cause for concern. The economy, despite its robust growth, does not generate enough good professional jobs to absorb the influx of highly educated young adults. And many of them bear the inflated expectations of their parents, who emptied their bank accounts to buy them the good life that a higher education is presumed to guarantee.

“College essentially provided them with nothing,” said Zhang Ming, a political scientist and vocal critic of China’s education system. “For many young graduates, it’s all about survival. If there was ever an economic crisis, they could be a source of instability.”

Read more about the “ant tribes” via CDT.

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Post tags: Ant Tribe, college graduate joblessness, graduates, unemployment
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So where have all the theoretically jobless peasants gone?

Structural unemployment – a mismatch between the skills workers have and those sought by employers – doesn’t fully explain the phenomenon. To answer the question, one needs to consider a combination of factors that symbolize the changing landscape of China’s labor force and modern society in general.

Firstly, there is indeed a structural problem here and it’s twofold: On the one hand, many of the outstanding job vacancies are due to a lack of skilled workers as segments of China’s export industry crawl up the value chain; but on the other hand, some factories complain that lots of the new-generation migrant workers aren’t interested in tough basic jobs like construction any more.

The lack of interest in such low-paying, physically demanding work partly stems from the second factor – the growing income at home for these farmers. Much to its credit, the Chinese government has consistently put developing agriculture and feeding the rural population (which measured 727.5 million in 2007) as its top priority over the years. An incessant stream of favorable policies, such as scrapping burdensome taxes and forceful market intervention, have increased rural incomes to the extent that farming is becoming more rewarding than cleaning skyscraper windows in some places.

© Sophie Beach for China Digital Times (CDT), 2010. | Permalink | One comment | Add to del.icio.us
Post tags: labor shortage, migrant workers, unemployment
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Back when Deng Kun was in college, studying biomedical engineering, he imagined himself working for a company like GE by now, helping to design state-of-the-art medical equipment.

Instead, he spends a lot of his time in the cramped and chilly room he shares with a friend in the outskirts of Beijing, playing video games or trying to line up a job as a salesman.

Mr. Deng moved to the capital when he graduated, he says, because “I thought there would be a lot of opportunities here.” He soon found out, though, that “it is not very easy to find a job as an engineer.”

Deng is a member of the “Ant Tribe,” as sociologist Lian Si has dubbed the swelling ranks of underemployed or underpaid Chinese university graduates frustrated by their failure to fulfill their ambitions.

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In the first 10 months of the year China already exceeded the number of new jobs it aimed to create in 2009, state media said on Saturday, in another sign the country is emerging from the global economic crisis.

China created 9.4 million jobs in urban areas in the first 10 months, exceeding the government’s target of 9 million new jobs for the year, the official Xinhua news agency said, citing the Ministry of Human Resources and Social Security.

It added that about 4.4 million laid-off workers found new work in the January-October period, some 88 percent of the full-year goal of 5 million.

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The prime cause is not the expanding of university enrollment, but a structural surplus – every graduate wants to be an official in a big city, but there are not enough such positions. Meanwhile, there are many vacancies which graduates are not interested in.

Why can’t we enhance the appeal of these vacancies? Offering high salaries would be a good start.

Before the Cultural Revolution (1966-76), you could get 80 yuan ($11.71) per month in Xinjiang, while in Beijing you would only make 46 yuan ($6.74). But now, with the situation reversed, who wants to work in western China?

Why doesn’t the government reflect on the situation? It’s unreasonable to put all the stress on the educational sector, blame the low employment rate of graduates on universities, and made the employment rate president-performance-related. No other countries do such things.

© Paulina Hartono for China Digital Times (CDT), 2009. | Permalink | One comment | Add to del.icio.us
Post tags: education, unemployment, Wu Qidi
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