China's prolonged economic slump, compounded by fears of job losses from the spread of artificial intelligence, is pushing young people to delay or abandon financial independence, marriage and childbirth, according to an analysis. With youth unemployment climbing, the warning is that China's Generation Z could become a "lost generation."
The Wall Street Journal reported on the 13th that feelings of helplessness and resignation are spreading among young Chinese, saying China's economic slowdown is creating a lost generation. The newspaper pointed to a property downturn and weak domestic demand that have reduced companies' capacity to hire, along with AI adoption that is curbing new recruitment. Generation Z refers to those born between the mid-1990s and the early 2000s.
According to the Journal, the urban unemployment rate for Chinese aged 16 to 24 stood at about 19% as of August, more than double the roughly 9% rate for the same age group in the U.S. The rate for those aged 25 to 29 was 7.5%, higher than the 5.3% in the U.S. and above China's overall unemployment rate of about 5%. Chinese authorities suspended publication of the youth jobless rate after it rose to 21.3% in June 2023, then resumed releasing it that December under a new standard that excludes students. As a result, cross-country comparisons must account for differences in methodology. The National Bureau of Statistics reported a youth unemployment rate of 14.9% in June of this year, the lowest in a year, but the figure rose 3.0 percentage points to 17.9% in July. The increase reflected a recurring seasonal pattern as graduates enter the labor market in July and August; last year the rate also climbed from 14.5% in June to 18.9% in August.
The shortfall in jobs is large. Steven Barnett, an economics professor at the University of Hong Kong, estimated that urban employment in China is about 7% below where it would have been had pre-COVID growth trends continued. Barnett previously served as the International Monetary Fund's chief representative for China. That gap translates to roughly 37 million jobs. The number of university graduates this year is 12.7 million, up about 4% from last year. Major technology companies including Alibaba and ByteDance are also cutting staff.
Frederic Neumann, chief Asia economist at HSBC, said this generation faces a considerably bleak situation and that it is unclear where good, high-paying jobs will come from. Researchers at ShanghaiTech University analyzed 700 million job postings on five major Chinese recruitment platforms from 2022 to the present and found that the decline in hiring demand tied to AI adoption was largest for entry- and mid-level workers with one to three years of experience. Bloomberg reported on July 21 that a combination of rising graduate numbers and concerns that AI is displacing entry-level jobs could push the youth unemployment rate back to levels seen about three years ago.
Citing people familiar with the matter, the Journal reported that Vice Premier He Lifeng asked major companies last year about AI's impact on employment, and that some replied more than 30% of existing jobs could disappear. He appeared shocked by the responses, according to the report. The sources said the Chinese government is encouraging AI adoption to strengthen national competitiveness while warning companies not to cut jobs in the process.
Young people are also making different choices. Some are leaving the competition for jobs in big cities for smaller provincial cities with lower living costs. Dali, a tourist city in Yunnan province, is one example. Ma Yongjian, 27, who was pursuing a master's degree in computer science at a prestigious Beijing university, dropped out and moved to Dali after job prospects dimmed amid the spread of AI and layoffs at technology firms. "In the past, everyone expected life to keep getting better and incomes to keep rising, but that is no longer the case," Ma told the Journal. "When I think about the future, there is not much hope."