Recent data from the National Bureau of Statistics shows that in July 2025, the unemployment rate for the 16-24 age group in China reached 18.9%. Although it has slightly decreased from its peak, it remains high at over 16% (see Figure 1). Behind this data reflects the systemic contradictions of deep structural imbalance in China's economy—youth unemployment is no longer a cyclical fluctuation but a structural problem formed by the interplay of multiple factors such as industrial structure, wealth distribution, and the education system. As a window to observe the Chinese economy, the high youth unemployment rate exposes the pains of transformation and provides key clues for understanding the future direction of the Chinese economy.
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Current Situation: Structural Characteristics of Youth Unemployment
Figure 1 shows that the youth unemployment rate curve for 2025 (red) is consistently higher than that of 2024 (black), especially rising to nearly 19% in July and August. It is worth noting that this data does not include students, which means the real unemployment pressure is even greater. Unlike mature economies, the core contradiction of youth unemployment in China is not the economic cycle downturn but the structural mismatch between labor supply and demand: on one hand, traditional manufacturing continues to reduce low-skill jobs due to automation upgrades; on the other hand, while high-tech industries are expanding, their talent requirements far exceed the capabilities of ordinary college graduates. This situation of "upgrading too quickly and insufficient adaptation" makes the youth group the most direct victims. -
Deep Logic: The Vicious Cycle of Multiple Imbalances
The high youth unemployment rate is essentially a concentrated reflection of China's long-term structural imbalance, with its roots summarized in five major contradictions:
(1) Imbalance in Industrial Structure: The contradiction between efficiency improvement and employment absorption
Over the past thirty years, China's manufacturing industry has achieved efficiency leaps through "machine substitution," but at the cost of a significant reduction in low-end jobs. It is estimated that each industrial robot introduced can replace 3-5 assembly line workers. However, the employment capacity of high-tech industries (such as semiconductors and artificial intelligence) is limited—one chip factory can only create hundreds of high-end positions while eliminating thousands of traditional jobs. The combination of this "technological substitution effect" and "high-end job bottleneck" has led to a situation where many youths are either "unable to find jobs" or "studying irrelevant fields."
(2) Real Estate Bubble: The linkage between wealth overdraft and consumption shrinkage
High housing prices have become a "blood-sucking machine" for household wealth. Data from the central bank shows that urban households' housing assets account for 59%, while mortgage balances exceed 40% of disposable income. When 60% of income is used to repay loans, residents are forced to cut back on flexible consumption such as education, healthcare, and culture, leading to weak domestic demand. Companies, facing reduced orders, have to lay off workers, further increasing the unemployment rate and forming a vicious cycle of "high housing prices—low consumption—high unemployment." More severely, the real estate industry chain (construction, decoration, intermediaries) absorbs about 20 million jobs, and its downturn directly exacerbates regional unemployment.
(3) Disconnection between Education and Jobs: The skills desert behind "degree inflation"
The expansion of higher education has raised the enrollment rate to 60%, but the alignment of majors with industrial demand is severely misaligned. An HR from an internet company admitted, "We need algorithm engineers, but universities are training 'code movers'." This "education-industry" disconnection leads to two outcomes: first, companies complain about "not being able to find suitable candidates," and second, graduates lament that "after four years of study, they still can't find jobs." According to the Ministry of Education, only 32% of 2024 college graduates are engaged in jobs related to their majors, while the rest have mostly shifted to low-end service industries like food delivery and live streaming.
(4) The Dilemma of Low-end Service Industry as an "Employment Reservoir"
Although the platform economy, such as food delivery and ride-hailing, has absorbed about 80 million flexible workers, these jobs exhibit "three lows" characteristics: low income (average monthly salary of 4,000-6,000 yuan), low security (only 28% of workers pay social insurance), and low stability (platform algorithms lead to severe order fluctuations). The youth group is forced to "downgrade their employment," which not only wastes educational resources but also makes it difficult to bear responsibilities such as mortgages and childcare due to low income, further suppressing consumption and forming a closed loop of "poor job quality—weak consumption ability—declining economic vitality."
(5) Regional Imbalance: "Employment Pits" under the siphon effect
Eastern coastal cities concentrate 70% of the country's high-tech enterprises and 60% of college graduates, while central and western provinces face the dilemma of "talent outflow—weak industries—insufficient employment." Data from a central province's human resources department shows that the retention rate of local college graduates is less than 30%, with most flowing to the Yangtze River Delta and Pearl River Delta. This regional differentiation not only intensifies employment competition in eastern cities (e.g., Beijing master's and doctoral graduates competing for street office positions) but also burdens families in central and western regions with heavy debts due to their children's real estate purchases in other places. Once unemployment occurs, it can easily lead to debt defaults and social conflicts.
- Path to Resolution: The Urgency of Systemic Reform
To solve the youth unemployment problem, it is necessary to move beyond the "treating the symptoms" mentality and promote structural and institutional reforms:
(1) Industrial Policy: From "efficiency first" to "employment-friendly"
While promoting the upgrading of manufacturing, it is necessary to retain a moderate number of labor-intensive industries (such as clothing and toys) and encourage companies to hire youth through tax incentives. More importantly, it is essential to vigorously develop modern service industries—each job created in fields such as research and development, digital economy, and health care can drive 2-3 related jobs. For example, Shanghai's Zhangjiang Hi-Tech Park has created 100,000 high-end jobs by transforming university laboratory results into corporate orders through "industry-university-research alliances."
(2) Real Estate: Building a long-term mechanism for "residential attributes"
Adhere to the principle of "housing for living, not speculation," accelerate the development of affordable rental housing, and allocate a larger proportion of land transfer revenue to public housing construction. At the same time, explore "property tax pilots" to curb speculative demand. Only by bringing housing prices back to a reasonable range can household consumption potential be released, creating more orders for businesses and fundamentally alleviating unemployment pressure.
(3) Education Reform: From "degree-oriented" to "skill-oriented"
Promote "integration of vocational and general education," expand the enrollment scale of vocational bachelor's programs (with a target of 10% by 2035), and promote the "modern apprenticeship system"—students spend half their time learning theory in school and half their time practicing skills in companies. For example, under Germany's dual education system, the youth unemployment rate has consistently been below 5%, which is worth learning from. In addition, universities should establish an "industry demand early warning mechanism" to adjust their majors in a timely manner and avoid "one-size-fits-all" education.
(4) Social Security: Building a solid "safety net" and "buffer"
Expand the coverage of social security for flexible workers, pilot "occupational injury insurance for platform economy workers"; raise the unemployment insurance standard (currently only 90% of the minimum wage) and extend the duration of benefits; establish "youth employment internship subsidies" to encourage companies to accept recent graduates for internships. These measures can not only stabilize youth expectations but also reduce "preventive savings due to fear of unemployment."
(5) Regional Coordination: Creating a new pattern of "multi-polar growth"
Guide eastern industries to gradually transfer to the central and western regions through forms such as "enclave economy" and "industrial transfer parks." For example, the "Suzhou-Suzhou Industrial Park" built in Suzhou, Jiangsu, has absorbed 100,000 local laborers for employment. At the same time, increase support for universities and vocational colleges in the central and western regions to cultivate localized talent and reduce the phenomenon of "peacocks flying southeast."
- Conclusion
The high youth unemployment rate is essentially a growing pain as China’s economy transitions from "factor-driven" to "innovation-driven." Solving this problem requires collaboration among the government, businesses, and universities, respecting market rules while leveraging institutional advantages. As Nobel laureate Joseph Stiglitz said, "Unemployment is not a market failure, but a policy failure." Only through systemic reform can the youth group share in the fruits of development and inject lasting vitality into the Chinese economy.