SINGAPORE — China's unemployment rate for youths aged 16 to 24 in urban areas hit a high of 21.3 per cent in June, after rising for every month this year. 

This worrying increase in youth unemployment has led to China suspending publication of its youth jobless data on Tuesday (Aug 15), saying it needed to review the methodology behind the benchmark. 

The announcement drew more than 140 million views on the Chinese social media site Weibo within a few hours, with some people online saying it was an attempt to try to hide negative information. 

Economists have widely forecast the youth unemployment rate for the world's second largest economy to have climbed further last month, after already having doubled in the last four years.

June's figure is especially alarming when compared to the unemployment rate of 4.1 per cent among those in China aged 25 to 59, according to China’s National Bureau of Statistics. 

And with a new cohort of 11.6 million university graduates joining the workforce in the coming months, the figure could rise further. 

Why has China's youth unemployment rate risen by so much, what short term consequences are there, and will there be any impact on the region? 

TODAY speaks to experts and Chinese youths to find out. 

WHY HAS THE UNEMPLOYMENT RATE RISEN? 

According to experts, China’s shaky economic recovery after lengthy pandemic lockdowns is one factor behind the increase in youth unemployment.

“Being in somewhat of a recession, (Chinese) industries simply cannot create enough jobs to absorb the many graduates who are coming out of schools every year,” said senior fellow at the Singapore Institute of International Affairs Oh Ei Sun. 

On Tuesday, China also announced that retail sales, industrial output and investment missed forecasts, fuelling concerns over a deeper, longer-lasting slowdown in growth. 

Activity data has been missing forecasts since the beginning of the second quarter.

Ms Jiayu Li, a senior associate at public policy advisory firm Global Counsel, added that a stagnating private sector, which accounts for 80 per cent of urban employment, is also to blame. 

“Private firms have been scrapping expansions and cutting down their workforce, as investor confidence declines amid growing state control and unexpected crackdowns in tech, finance and the private education industries,” said Ms Li. 

However, associate professor of sociology at the Singapore Management University Forrest Zhang said there could be another factor: Many young people in China are relying on family support from their parents and grandparents, and “can afford to be picky”. 

“That’s why even though they are looking for jobs and available for employment, they would only take jobs that are above a certain threshold. Otherwise, they can afford to stay unemployed,” he said. 

WHAT IS THE SHORT-TERM IMPACT ON CHINA? 

Assoc Prof Zhang said that while the 21 per cent youth unemployment figure seems large, it has to be “put in the right context”. 

This is because the total number of youths between 16 and 24 in the labour force is only 33 million out of a total population of nearly 100 million, with the rest still in school and not seeking jobs. 

“And out of the 33 million in the labour force, 21.3 per cent are unemployed, which is just 6 million. In the entire Chinese labour force, this 6 million is a negligible figure,” he said. 

Dr Oh said that even though this is a small figure when compared to the entire Chinese workforce, it is still about 6 per cent of all youths aged between 16 and 24 who are unemployed, if even those who are studying are counted, which is still more than the 4.1 per cent of those aged 25 to 59 who are unemployed. 

The short term impact of this has been well-documented, with some youths returning to their hometowns to become “full-time children” to their parents. 

CNA Insider reported that some young people who have done this are being paid by their parents to accompany them and run errands for the family.

There is also the protest movement of Chinese youths “lying flat”, referring to the idea of just doing enough to get by. 

The movement took off in 2021 as the youths felt disappointed by their lack of social mobility and so decided not to follow values such as hard work, home ownership and marriage that had been traditionally sought after. 

WHAT IS THE LONG-TERM IMPACT ON CHINA AND THE REGION? 

Analysts say that economic woes and a drop in China's competitiveness on the world stage could ensue if the issue of rising youth unemployment is not resolved. 

"Many of these more highly skilled personnel are not in the workforce, so you lose out in the long run. The country's economy would lose capable hands," said Dr Oh. 

There could also be a “ticking social challenge” should youth unemployment be sustained. 

“High youth unemployment not only undermines China’s long-term economic competitiveness but, if sustained, would give rise to social instabilities, threatening the political security that Beijing is most concerned about,” said Ms Li. 

Agreeing, Dr Oh said that rising crime rates, for instance, are often associated with economies with high youth unemployment.

“Having a large group of unemployed and potentially dissatisfied young people is a ticking social challenge for any country. If you don't address it, you have social problems such as higher crime rates,” he said. 

As for whether the region will be affected, Dr Oh said that while Chinese youths may desire to move overseas to seek new opportunities, many Southeast Asian countries have “very strict immigration rules”. 

“I don't really see a lot of (youths) coming out from China,” he said. 

One Chinese citizen living in Singapore, who wanted to be known only as Chris, said that the situation back home was worrying for him and has discouraged him from returning to China in the meantime to work. 

The 29-year-old who works in the finance sector said that Singapore would be a prized destination for Chinese graduates due to the perception of more attractive job prospects and the language barrier being less of an issue as there are many Mandarin speakers here. 

In fact, many who have studied in Singapore, like himself, prefer to continue working here rather than return to China and face bleaker prospects. 

However, the long-term career prospects of a typical young Chinese worker are still limited in Singapore, as many do not receive a long-term pass to stay here, he said, having seen examples of those who had returned to China to find work as they could not apply for permanent residency, for instance. 

“If they cannot get the highest-tiered (employment) visa, they will choose to go back, as they cannot apply for PR and there's no point for them to continue working here in the next few years,” he said.