The Youth Apocalypse: China's Triple Crisis Unveiled | Digging into ChinaChina's

Hi, I'm Dong Xiong. Welcome to Digging into China, where we explore China in depth to reveal unique perspectives. After Japan entered its lost 30 years, a term emerged for the generation hit hardest by the bursting of the economic bubble, the Heisei generation. They became known as Japan's most unfortunate generation, often criticized by elder generations as the slacker generation. Looking at the data, I believe Chinese youth today are on a similar path, poised to become China's most challenged generation. Unlike Japan, however, the issues facing Chinese youth are even more daunting. In this episode, we'll explore the difficulties confronting China's younger generation. In my view, today's Chinese youth face enduring challenges both now and in the years ahead, which can be grouped into three main areas, the unemployment crisis, the burden of supporting an aging population, and the loss of generational economic advantages. Let's begin with the unemployment crisis. China's National Bureau of Statistics recently reported the youth unemployment rate for August, stating it reached 18.9%, a record high since tracking began. Many in China likely feel this figure understates reality. The actual youth unemployment rate is almost certainly higher than the official numbers suggest. The problem starts with how the National Bureau of Statistics calculates this rate, and the government makes little effort to conceal these flaws. Those familiar with the issue may recall that in mid-2023, the youth unemployment rate was even higher. In June 2023, it hit 21.3%, sparking widespread public discussion. But as the numbers climbed and dissatisfaction grew among young people, the government didn't address the unemployment issue. Instead, it simply stopped releasing the data. If the problem can't be solved, they seem to reason, eliminate the messenger. This approach was evident. When faced with a challenge, they ignored it and moved on. After some adjustments, the youth unemployment data was reintroduced six months later. With the government's refinements, the youth unemployment issue appeared to improve significantly, dropping to 14.9%. However, this manipulation of the data didn't alter the underlying trend of widespread joblessness among Chinese youth. Even with the revised methodology, the rate has continued to rise, reaching 18.9% today. What would 18.9% under the new methodology equate to under the old one? I estimate it would be at least 25% or more. Moreover, there is a significant flaw in how China's youth unemployment data handles the lying-flat population, those who have given up entirely. This group is similar to Japan's NEETs, meaning those not in employment, education, or training. In China, they are also called the Nying-on-the-Elderly generation, referring to those who rely on their parents for support. These individuals aren't counted in unemployment statistics, because under the government's methodology, being jobless isn't enough to be considered unemployed. You must also be actively seeking work. Those who've given up looking for jobs, however many there are, aren't included in the unemployment figures. This NEET group, or Nying-on-the-Elderly population, is measured by the NEET rate, which is soaring in China. Research from Professor Su Li-fung at the University of International Business and Economics shows that China's NEET rate surged from 11.5% in 2018 to 20.4% in 2024, nearly doubling. This means that among today's Chinese youth, at least one in five has abandoned the job search out of despair and is living off their parents. Of the five who are still looking, at least one remains jobless. This is the true state of affairs in China today. If calculated accurately, China's youth unemployment rate has reached an alarming level, likely unprecedented in the country's modern history. Beyond China's own past, comparisons with other nations are telling. Japan, during the last 30 years, currently has a youth unemployment rate of just 4.1%, lower than China's overall unemployment rate across all ages. Even at Japan's worst, in September 2001, their youth unemployment rate was only 10.8%. In Canada, recent concerns about youth unemployment have made headlines, but their rate is just 14%, with a historical peak of 19.2%. The U.S. is similar, with a current youth unemployment rate of 10.8% and a historical high of 19.2% in 2009. China's actual youth unemployment rate likely exceeds the historical peaks of both the U.S. and Canada. In this regard, China has surpassed the established capitalist nations and continues to lead. When I hear Americans complain about job hunting difficulties, I am tempted to say they've had it too easy for too long. They should experience China's job market. To those studying abroad who are considering returning to China because finding work overseas feels tough, I strongly urge caution. Yes, securing a job abroad is challenging, but it's far easier than in China. Chinese youth are enduring a historic unemployment crisis. Don't be swayed by misleading posts on platforms like Little Red Note. The unemployment issue extends beyond recent graduates. Tucked away in the Youth Unemployment Report is a detail. The unemployment rate for those aged 25 to 29 has reached 7.2%, also a record high. Joblessness among young adults is quietly rising, and since many in this age group take gig jobs like food delivery, their unemployment rate is likely understated. In the government's view, delivering food for just one hour a week counts as employment, a remarkably low threshold. Will job prospects for young people improve? Based on current trends, it seems unlikely. The youth unemployment crisis is poised to be a persistent problem. Job availability, like the market for goods, hinges on supply and demand. Right now, there is no sign of improvement. On the supply side, the number of people entering the workforce won't decrease significantly soon. If we assume Chinese youth typically start university at 18 and graduate at 22, those entering the job market in 2026 will be born in 2004, followed by the 2005 cohorts in 2027, and so forth. What's happened to China's birth rate since 2004? They've remained largely stagnant, meaning the supply of labor entering the job market won't see major reductions and may even rise slightly. On the demand side, two factors matter, China's economic condition and its population size. Population determines the number of consumers, while the economy dictates their spending power. Together, these determine market demand or the number of jobs available. Both look bleak for the future. While the number of young graduates remains steady, China's overall population will begin a noticeable decline in the coming years, with a sharp drop expected by 2030. Economically, there is no sign of recovery. China's consumer confidence index has been dismal for years. I have discussed specific economic issues before, so I won't delve into them here. In short, the job market crisis for young people is likely to be a long-term burden on this generation. Unemployment, however, isn't the only challenge. The growing burden of supporting an aging population is another. Recent policies like delayed retirement and mandatory social security contributions are just the beginning. While China's total population will decline, the responsibility on each young person will only increase. Currently, China has about 960 million working-age people supporting 226 million elderly, equating to roughly 4.25 young people per elderly person, a manageable burden. By 2035, however, the working-age population will drop by 110 million to 850 million, while the elderly population will rise by 140 million to 360 million. This shifts the ratio to 2.25 young people per elderly person. In just 10 years, the social burden of supporting the elderly will nearly double, approaching Japan's current level. China will cover Japan's 30-year journey in a decade. Who will bear this weight? Today's working Chinese. Today's youth. China's pension system operates on a pay-as-you-go model, where current workers fund current retirees. In the future, this immense pension burden will fall on every working young person. Complaints about high social security contributions are already common, but these rates are just the start. China's aging population issue is only beginning to emerge, marking the onset of a demographic aging cycle. The current pension and health care systems are deeply flawed, with high contribution rates. Excluding housing funds, the five social insurance programs require workers to contribute about 30% of their wages. In an era where four and a quarter workers support one elderly person, this 30% is needed to sustain China's fragile pension and health care systems. By 2035, with two and a quarter workers per elderly person, workers may need to contribute nearly 60% of their wages to maintain the current imperfect system. By 2045, this could rise to 80%, an almost unimaginable burden. Even more sobering, while today's generation supports the previous one, they may have no one to support them in retirement. Based on current birth rates, by 2080, China will reach a 1-to-1 ratio of working age to elderly people. One worker per elderly person is catastrophic for any society. No country has faced such a structure, and it's hard to envision the one sustaining it. The result? Today's youth may support others their whole lives, only to face a future with no one to support them. Beyond these pressures, today's youth face another issue, the absence of generational economic advantages. Worse, this generation isn't just missing out on gains, they are paying the prices for the previous generation's prosperity. What was China's greatest economic advantage in the past? The answer is clear, real estate. The previous generation earned low wages, perhaps a few hundred yuan a month or even less. Yet their wealth far exceeded their salaries, thanks to decades of real estate appreciation. Zhang Bin from the Chinese Academy of Social Science proposed the 456 theory. 40% of bank loans, 50% of government revenue, and 60% of personal wealth in China come from real estate. High housing prices, though criticized, benefit those who enter the market early, serving as their primary income source and offsetting China's income disparity. Chinese per capita income doesn't align with the country's per capita GDP due to distribution issues. The government takes a large share, leaving disposable income at just 40% of GDP, well below the global average of 60%. Based solely on wages, China's income level resembles those of Thailand, with a per capita GDP of about $7,000. Yet in the past, Chinese people didn't feel poor. They experienced the benefits of economic growth and had global purchasing power. This came from real estate gains, which supplemented incomes, including real estate wealth. China's income levels were closer to Poland's at $25,000 per capita GDP. Real estate fueled a leap in Chinese income. Consider Chinese international students. Thousands of thousands study in the UK, US, Australia, and Canada. Are their tuitions funded by parent savings? Often they come from selling appreciated properties. The recent drop in Chinese students abroad reflects not just a degree devaluation, but the real estate market collapse, which has eroded the middle class's ability to afford overseas education. Since 2021, real estate appreciation has halted, delivering a blow to today's youth. Their incomes have reverted to wage levels, aligning China with countries like Thailand. For those who bought property, the result is worse. Not only did they miss economic advantage, but they faced asset depreciation and a crushing mortgage debt, becoming true house slaves. These three issues, unemployment, the burden of supporting the elderly, and the loss of economic advantages, are the greatest challenges facing Chinese youth. The job market is the toughest it's ever been, and this will persist. Older youth with jobs face rising unemployment risks, with the crisis now affecting those around 35. This generation will also shoulder a massive burden to support an aging society, only to face a future where no one supports them in retirement. Most tragically, the economic advantages of past generations are gone. With the real estate markets collapse, China lacks stable appreciating assets, leaving young people without a supplementary income. This generation has entered an era without advantages. Who's to blame? Not individual young people. In the face of this societal tide, individuals are powerless. The root of the issue lies in the collective missteps of three generations of Chinese leadership. The current economic downturn and job scarcity stem from Xi Jinping's flawed policies. The sudden burden of supporting an aging population and China's distorted demographic future trace back to the one-child policy proposed in 1978 and made national policy in 1982. Its consequences, not fully apparent then, have returned like a boomerang 40 years later, shaping today's imbalanced population structure. The real estate collapse ties back to Jiang Zemin's era. The 1994 tax-sharing reform defined local and central government finances, leaving a loophole that allowed local governments to rely on land revenue. To boost this revenue, they drove up housing prices, fueling the real estate bubble. In essence, the challenges facing Chinese youth today result from the combined policies of leaders from Deng Xiaoping to Xi Jinping. The cost of their mistakes has erupted on this generation. China's past development and leadership errors were never without cost. We simply didn't realize we'd become that cost until now. Thank you so much for watching. If you find this video helpful, please like it, drop a comment below, and hit the subscribe button right here. It really helps YouTube suggest my videos to others. 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