Sharing prosperity is China’s newest policy priority. But the country’s young have yet to get a taste of it, as they have difficulty finding a job and cannot afford to buy a home, get married and raise a family.
China is still a fast-growing economy that has raised per-capita GDP. As a result, the average Chinese citizen is much better off today than four decades ago when the country’s economy was mired in stagnation.
“In 1960, China’s economy was about 11% of the U.S. economy,” Tenpao Lee, professor emeritus of economics at Niagara University, told International Business Times. “However, in 2022, China’s economy jumped to more than 70% of the U.S. Economy. In addition, China’s population was more than four times the U.S. population.”
Economic growth pushed China’s GDP per capita in 2022 to about 20% of the U.S. GDP per capita. “It is obvious that China’s economy has grown successfully for the last 40 years, and it is likely that China will grow faster than many developed countries in the next five to 10 years,” Lee added. “Due to its tremendous population and geographical size, China’s role in shaping the global economy became influential in recent years.”
Yet more than economic growth and global influence are needed to provide good-paying jobs for the country’s youth.
China’s youth unemployment rate jumped from 13.6% in April 2021 to 23% in April 2023, a period overall unemployment rate trended lower.
The problem is so severe that tens of thousands of master’s degree holders earn a living as delivery workers.
Lee attributes China’s youth unemployment rate to growing pains, like the gap between the urban and rural areas, the inequality of income distributions and the negative externalities of environmental issues. “In contrast to the U.S. economy, China is still a manufacturing-oriented economy rather than a service-oriented one,” he explained. “Most jobs created in China were labor-intensive rather than capital-intensive. Therefore, the labor market had more supply of college graduates relative to its demand. However, the pay level was low for college graduates at entry levels, and more young people were unemployed.”
He thinks the solution to the problem is for China to focus on economic development rather than economic growth. “Economic development implies structurally and technological changes, i.e., the quality as well as the quantity,” he added. “Many high-paid jobs offer intangible services, such as I.T. providers, health care, banking, insurance and marketing. Unfortunately, China has minimal developments in those areas.”
Still, focusing on development rather than growth won’t solve another problem China’s young people face: the soaring property values that keep making landlords rich.
At the same time, it shatters the dreams of the younger generations of buying a home, getting married and having children. For instance, in March 2023, the average price of new homes rose by 0.5%, the fastest since June 2021. According to Reuters’ calculations, that’s the third consecutive monthly rise.
Meanwhile, China’s demographics are worrisome. First-time marriages dropped to 11.6 million last year, close to 700,000 down on the previous year, according to the China Statistics Yearbook 2022 — half the peak of 23.9 million in 2013.
Moreover, the country’s birth rate in 2022 dropped to 6.77 births per 1,000 people, from 7.52 births in 2021, 8.52 in 2020 and 10.41 in 2019, according to statistics from China Statistical Yearbook 2021, reported recently by Caixin.
Paradoxically, China’s property bubble results from one government policy promoting the development of ghost cities — newly-built vacant apartments — owned by affluent landlords with the expectation to profit from rising home prices.
That’s a self-fulfilling speculative strategy. Keeping apartments off the market leads to housing shortages and higher home prices. It brings prosperity to landlords and misery to young people who cannot afford them.
