China is facing an economic crisis, and economist Nancy Qian believes that the root of the problem lies in the country's youth unemployment issue. In an op-ed for Project Syndicate, Qian argues that the lack of high-paying, high-skilled jobs is hindering China's economic growth. She suggests that the government needs to create conditions for job creation in high-productivity sectors and invest more in higher education.
According to China's National Bureau of Statistics, a record 21% of workers aged 16-24 were unemployed in the second quarter. This high unemployment rate among the younger generation is largely due to the scarcity of high-skill and high-paying jobs in the labor market, making it difficult for college graduates to find employment.
Qian also points out that the government's initiatives have exacerbated the problem. For example, the ban on online tutoring in 2021, aimed at reducing pressure on schoolchildren, has led to a decrease in available jobs in the tech industry. Additionally, efforts to increase China's fertility rate have made employers hesitant to hire younger women, further impacting their employment prospects.
The current economic slowdown in China is also a cause for concern. Real estate and factory activity have slowed, and there is a risk of deflation as demand remains sluggish. GDP growth has already declined to 6.3% in the past quarter, below economists' expectations.
Qian's analysis suggests that China's economic outlook is worrisome, particularly considering that the government's policies to address the issues have not been effective. Some experts even predict a lost decade for China's economy if it does not recover soon. This could have implications for US firms that have significant exposure to China.
Overall, the situation in China is concerning, with youth unemployment and a slowing economy posing significant challenges. The government will need to take effective measures to address these issues and stimulate economic growth.