Introduction
On September 17, China reported that its youth unemployment rate reached a historic high in August, using a revised calculation method since its resumption last year. This news comes amidst a series of discouraging economic data.
Background on Youth Unemployment
China’s Youth Unemployment Rate: The government’s unemployment rate for individuals aged 16 to 24 soared to over 21% in June 2023, prompting the National Bureau of Statistics (NBS) to suspend its monthly publication.
The rate dropped by more than six percentage points when the figures resumed in December of that year, but they were based on a new methodology excluding students.
The rate has fluctuated over the past year as Beijing attempts to revitalize a struggling economy, exacerbating labor market concerns.
Official Data from NBS
According to the official data released by the National Bureau of Statistics (NBS) on September 17, China’s youth unemployment rate reached 18.9% in August, the highest level since the methodology change.
This increase reflects a recent trend of disappointing figures indicating the strain on the world’s second-largest economy.
Broader Economic Context
Other recent economic indicators paint a challenging picture for China:
- Industrial Production and Retail Sales: Both increased at a slower pace last month compared to the previous year, according to authorities earlier this week.
- Weak Domestic Demand: NBS Chief Economist Fu Linghui acknowledged the “weak” demand in the national economy and mentioned that “some companies are facing operational difficulties.”
- Multiple Challenges for Growth: Beijing faces multiple fronts in ensuring stable growth, including a prolonged debt crisis affecting the real estate sector, persistent internal consumption sluggishness, and rising trade tensions with Washington.
Global Impact and Key Questions
Key Questions and Answers:
- What does this mean for China’s economy? The high youth unemployment rate, coupled with other disappointing economic indicators, suggests that China’s economy is under significant strain.
- How does this affect global markets? As the world’s second-largest economy, China’s economic challenges can have ripple effects on global markets and trade.
- What are the potential long-term consequences? Persistent high unemployment among young people could lead to social and political instability, further complicating China’s economic challenges.
