Recent data from the National Bureau of Statistics shows that the unemployment rate for 16-24 year-olds in China reached 18.9% in July 2025. Although it has slightly decreased from its peak, it remains high at over 16% (see Figure 1). Behind this data lies a reflection of 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 not only exposes the pains of the transition period but also provides key clues for understanding the future direction of the Chinese economy.
I. 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 climbing to nearly 19% in July-August. It is noteworthy 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-skilled 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 "too fast upgrades and insufficient adaptation" makes the youth group the most direct victims.
II. Deep Logic: The Vicious Cycle of Multiple Imbalances
The high youth unemployment rate is essentially a concentrated reflection of the long-term structural imbalance in China's economy, with its roots summarized in five major contradictions:
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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 a few hundred high-end positions while eliminating thousands of traditional jobs. The combination of this "technological substitution effect" and the "high-end job bottleneck" has led to a situation where many youths are either "left without jobs" or "studying for irrelevant positions." -
Real Estate Bubble: The linkage between wealth overdraft and consumption shrinkage
High housing prices have become a "blood-sucking machine" for family 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 for mortgage repayment, residents are forced to cut back on flexible consumption in education, healthcare, and culture, leading to weak domestic demand. Companies, facing reduced orders, are forced to lay off workers, further raising 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. -
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 representative from an internet company admitted, "We need algorithm engineers, but universities are training 'code movers'." This "education-industry" disconnect 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 a job." According to statistics from the Ministry of Education, only 32% of 2024 college graduates are engaged in jobs related to their major, while the rest have mostly shifted to low-end service industries like food delivery and live streaming. -
The Dilemma of Low-End Service Industry as an "Employment Reservoir"
The platform economy, including food delivery and ride-hailing, has absorbed about 80 million flexible workers, but these jobs exhibit three low 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 impossible for them to bear responsibilities such as mortgage and childcare due to low income, further suppressing consumption and forming a closed loop of "poor job quality—weak consumption ability—declining economic vitality." -
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 PhD graduates competing for street office positions) but also burdens families in central and western regions with heavy debts due to their children purchasing homes in other locations. Once unemployment occurs, it can easily trigger debt defaults and social conflicts.
III. Breaking the Deadlock: The Urgency of Systemic Reform
To solve the youth unemployment problem, it is necessary to move beyond the "headache medicine" mindset and promote structural and institutional reforms:
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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 like research and design, digital economy, and health care can drive 2-3 related jobs. For example, the Zhangjiang High-tech Park in Shanghai has created 100,000 high-end jobs by transforming university laboratory results into corporate orders through "industry-university-research alliances." -
Real Estate: Building a long-term mechanism for "residential attributes"
Adhere to the principle of "housing is for living, not for 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 allowing housing prices to return to a reasonable range can household consumption potential be released, creating more orders for businesses and fundamentally alleviating unemployment pressure. -
Education Reform: From "degree-oriented" to "skill-oriented"
Promote "integration of vocational and general education," expand the enrollment scale of vocational undergraduate programs (with a target of 10% by 2035), and promote the "modern apprenticeship system"—students spend half their time in school learning theory and half in companies practicing skills. For example, under Germany's dual education system, youth unemployment rates have consistently remained below 5%, which is worth learning from. Additionally, universities should establish an "industry demand early warning mechanism" to adjust majors in a timely manner and avoid a "one-size-fits-all" approach. -
Social Security: Building a solid "safety net" and "buffer"
Expand the coverage of social insurance for flexible workers and 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 a "youth employment internship subsidy" 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." -
Regional Coordination: Creating a new pattern of "multi-polar growth"
Guide the gradient transfer of eastern industries to the central and western regions through forms such as "flying land economy" and "industrial transfer parks." For example, the "Suzhou-Suzhou Industrial Park" built in Anhui's Suzhou has absorbed 100,000 local laborers for employment. At the same time, increase support for colleges and vocational schools in the central and western regions to cultivate localized talent and reduce the phenomenon of "peacocks flying southeast."
IV. Conclusion
The high youth unemployment rate is essentially a painful transition for China's economy from "factor-driven" to "innovation-driven." Solving this problem requires collaboration among the government, enterprises, and universities, respecting market rules while leveraging institutional advantages. As Nobel laureate Joseph Stiglitz said, "Unemployment is not a failure of the market, but a failure of policy." Only through systemic reform can the youth group share in the fruits of development and inject lasting vitality into the Chinese economy.