But her situation changed dramatically this summer. Just as Cherry was about to graduate from university this year and start her job, she was told by the company that her offer has been rescinded as it had to “adjust” its business and cut staff.
Her peers received similar calls.
“I think it’s because of the pandemic,” the 22-year-old said. “Most companies have been affected by Covid lockdowns this year.”
She asked to only be referred to as Cherry, for fear of reprisals from future employers.
“Us fresh graduates are definitely the first batch of people to be laid off, because we just joined the company and haven’t made much contribution,” Cherry said.
A record 10.76 million college graduates entered the job market this year, at a time when China’s economy is losing the ability to absorb them.
The rate fell slightly to 18.7% in August, but still remains among the highest ever, data from the National Bureau of Statistics showed on Friday.
That means there are currently about 20 million people aged 16 to 24 out of work in cities and towns, according to CNN calculations based on official statistics that put the urban youth population at 107 million. Rural unemployment isn’t included in official data.
“This is certainly China’s worst job crisis for young people” in over four decades, said Willy Lam, a senior fellow of the Jamestown Foundation in Washington D.C.
“Mass unemployment is a big challenge for the Communist Party,” he said, adding that providing economic growth and job stability is key to the Party’s legitimacy.
The once-freewheeling industry was long the main source of high-paid jobs for young, educated workers in China, but major companies are now downsizing at a scale not seen before.
This is the biggest reduction in its staffing since Alibaba was listed in New York in 2014, according to CNN calculations based on its financial documents.
“The significance of these latest tech industry cuts cannot be understated,” said Craig Singleton, senior China fellow at the DC-based Foundation for Defense of Democracies.
“These latest cuts represent a dual threat for Beijing going forward — not only do thousands of people unexpectedly find themselves out of work, but now these Chinese tech giants will have fewer qualified employees to help them innovate and scale-up to take on their Western competitors,” Singleton said.
“There is a saying in business circles that ‘if you are not growing, you are dying,’ and that simple truth threatens to undermine China’s broader technological ambitions,” he added.
Social instability
“There are growing indications that the tenuous trust that exists between the Chinese people and the Chinese Communist Party is starting to fray, which could lead to a breakdown in social cohesion,” Singleton said.
The unemployment issue has come at a sensitive time for the Chinese leader, experts said. Xi is seeking a historic third term when the Communist Party hold its congress next month.
“The party congress is so close now that I don’t see any significant risk that lay offs will interrupt the preparations for Xi to be nominated, and accept, a ground breaking third term of office,” said George Magnus, an associate at the China Centre at Oxford University.
But youth unemployment will constitute a “major threat” to China’s economic and political stability in the long run, he added.
It is not as if the government isn’t aware of the problem, but so far it has not been able to come up with any concrete solutions.
In June, the ministries of education, finance, civil affairs, and human resources and social security jointly issued a statement, ordering local governments to offer tax incentives and loans and attract college graduates to work as village officials or to start businesses there.
These restrictions are hurting the world’s second biggest economy badly — analysts are forecasting growth of just 3% or under for this year. Excluding 2020 — when the pandemic started in China — it would mark the country’s lowest annual growth since 1976.
But the Covid policy is likely to stay in place for several months, as Xi will not want to see any uncontrollable rise in Covid cases until his political future is secured, experts said.
According to Magnus, “the likelihood is that China will try and muddle through the next several years, with a high risk of economic instability.”
For graduates like Cherry — who is still unemployed — this means giving up her dreams of joining the tech industry and turning to lower-paid government jobs for stability.
“I wanted to work for internet companies straight after graduation, because I’m so young,” she said.
“But because of this incident, my thinking has changed. I think it’s good to have stability now.
CNN’s Mengchen Zhang in Beijing contributed to this report.
