Employment prospects are dim for China’s college graduates amid an economic slowdown.
While the number of graduates entering the job market has significantly increased, small- and medium-sized enterprises—the primary employers of new graduates—have suffered mass closures due to the Chinese Communist Party’s (CCP) three-year “zero-COVID” policy. Consequently, graduates are under unprecedented pressure to find work.
On May 11, Ding Xuexiang, vice premier of the State Council, spoke during a telephone conference on employment and entrepreneurship for new college graduates. Given the dismal state of China’s job market, he urged lawmakers to implement stable employment policies to assist recent graduates struggling to find jobs.
The Ministry of Education estimates that this year’s pool of new college graduates will reach 11.58 million, an increase of 820,000 compared to 2022. Further exacerbating this situation is the rising number of overseas graduates who return to China for employment each year. In 2021, that figure exceeded 1 million overseas graduates.
Last month, Shanghai Ocean University, which is considered a “Double First Class” or top university, revealed the dire employment situation during a conference. As of April 11, the average employment rate for graduates with a bachelor’s degree in Shanghai was 24.1 percent, and for graduates with advanced degrees, it was 40.66 percent. The university’s employment rate was lower than the average for Shanghai’s universities.
The CCP’s National Bureau of Statistics released a report on China’s employment situation for the first quarter of this year. It stated that in March, the average unemployment rate for urban youth aged 16 to 24 climbed to 19.6 percent. In January and February, the average unemployment rates for this group were 17.3 percent and 18.1 percent, respectively. However, given the CCP’s history of underreporting and covering up information, the actual numbers could be higher.
During a research conference on “stable employment” held by the State Council in April, officials emphasized the need to expand employment opportunities in small- and medium-sized firms.
Currently, small- and medium-sized enterprises contribute to more than half of China’s tax revenue, over 60 percent of the gross domestic product (GDP), over 70 percent of technological innovation, over 80 percent of urban labor employment, and over 90 percent of the total number of enterprises, according to official data.
Various Chinese universities successively released their “2022 Graduates’ Employment Quality Reports” this year, which show that private firms are the leading force in employing graduates. At many schools, the number of graduates absorbed by private enterprises far exceeds that of state-owned enterprises (SOEs).
According to 2022 data, at Shanghai Jiao Tong University, nearly 46 percent of graduates with a bachelor’s degree got jobs in private enterprises, while 35 percent found employment in SOEs. Among the graduates with advanced degrees, 49 percent joined private companies, almost double the proportion (24 percent) that entered SOEs.
At Beihang University (BUAA, a research university of Aeronautics and Astronautics), 35.8 percent of graduates with a bachelor’s degree entered private enterprises, while 28.4 percent joined SOEs. Among the graduates with advanced degrees, 36.4 percent joined private companies, surpassing the proportion (22.5 percent) that entered SOEs.
At Northeastern University, 43.5 percent of graduates with a bachelor’s degree entered private enterprises, while 40.1 percent found employment in SOEs.
At the University of International Business and Economics, half of the graduates with a bachelor’s degree joined private enterprises.
At Northwest A&F University, 53 percent of graduates with a bachelor’s degree and 43.6 percent of those with advanced degrees joined private enterprises.
Grim Outlook for Chinese Firms
However, the situation for private enterprises is not optimistic this year.
Although CCP officials have been touting the beginning of China’s economic recovery, their April reports acknowledged the challenges that small- and medium-sized enterprises face, such as low consumer demand, tight cash flow, and pressure to change business practices to adapt to market conditions.
According to the South China Morning Post, statistics show that in the first 11 months of 2021, approximately 4.37 million small- and medium-sized enterprises in China permanently closed, more than three times the number of new businesses that opened during the same period. The number of small- and medium-sized firms that deregistered in 2020 reached a historical high of 4.45 million, almost twice as many as in 2019 and about 10 times more than in 2018.
Meng Jun, a private entrepreneur who recently immigrated to the United States from mainland China, shared in the May 13 episode of the “Elite Forum” program on NTD, the sister media outlet of The Epoch Times, that about half of the companies in the industrial park where his factory was located are either on the verge of closure or unable to resume operations.
Financing is difficult, Meng said. Restarting operations after a factory shutdown requires capital. However, obtaining loans in China has always been challenging for small- and medium-sized enterprises. They usually seek loans from smaller banks with higher interest rates to secure funds. State-owned banks don’t usually lend to small- and medium-sized firms but typically provide loans to SOEs. As a result, China’s small- and medium-sized enterprises have been struggling after the pandemic.
Meng said that after the Chinese New Year, many of his friends in the industrial park asked each other if their businesses had resumed operations. The response was that they hadn’t because there were no orders.
Meng also shared his arduous journey of running a private enterprise in China. Due to pandemic lockdowns and draconian measures, his company, with a revenue of 300 million yuan (about $43.47 million), went bankrupt.
Meng stated that his latex product export business had its heyday in 2017 and 2018 when there were more orders. However, in early 2020, his factory shut down multiple times. Even if one positive COVID-19 case was reported in the community, the entire region would be completely locked down and subjected to comprehensive nucleic acid testing. By the end of 2021, he felt that reopening his business was no longer worth it, so he closed his operations in Guangxi, Beijing, and Chongqing.
Shi Shan, a China expert and current affairs commentator, told NTD that all three drivers of China’s economy—exports, consumption, and investment—face problems, and the economic situation is truly dire.