Is China's economic success story faltering? Unemployment rate hits 20%; 1 in every 5 Chinese can't find a job and are living on a shoestring budget

The dream of a successful career and a stable life seems a distant reality in China. The rate of unemployment for those between the ages of 16 and 24 nearly hit 20% last month, meaning roughly one in every five Chinese simply cannot find a job, reported Market Watch.

For years, China’s leaders have aimed to pivot the economy away from its reliance on manufacturing and exports, hoping to tap into its massive consumer market.

However, this shift has proven difficult, with progress remaining slow. The challenges got worse by the pandemic and the ongoing crisis in the property market, further complicating the country’s economic transformation. About 70% of Chinese household wealth is tied up in real estate, according to government statistics.


China is facing a demographic time bomb, reported Market Watch. For the third year in a row, its population shrunk in 2024, which means the number of old people will outnumber the young workforce in the future. The shift has instilled fears of "Japanification," when the country struggles to support its elderly with fewer working-age people and puts more pressure on families, many of whom are only children.

Even China's pension system is in trouble, with experts predicting it will run out of funds by 2035. While the government promised to address unemployment, boost consumer confidence, and strengthen the pension system, only little has been done so far to ease the burden.

Most Chinese citizens are losing their confidence in the financial security system. According to the Market Watch, the super-rich have been reallocating funds outside of China for decades, long before President Xi Jinping’s reign and China’s new normal of slower-paced economic expansion.

Signs have recently emerged that even middle-class Chinese have become so worried about the security of their savings and they too are seeking ways to move funds abroad, often to the US, Australia or the United Kingdom, as per the report.

FAQs

Why is unemployment so high among China’s youth?
Youth unemployment in China hit nearly 20% due to the country’s slow economic shift from manufacturing to consumer-based growth, compounded by the pandemic and a property market crisis. Many young graduates are struggling to find stable jobs, even with advanced degrees.

How does China’s demographic crisis affect its economy?
China's shrinking population, particularly the growing number of elderly people, places a massive strain on the economy. With fewer young workers, the country faces challenges in supporting its ageing population, creating fears of an economic slowdown similar to Japan's "Japanification" scenario.