Unveiling the ominous truth behind China’s alarming youth joblessness.

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Despite China’s post-Covid boom, youth unemployment in the country has reached record highs, with an unemployment rate of 20.4% for Chinese citizens aged 16-24 in April, while the overall jobless rate fell to 5.2%. A new report from Goldman Sachs examines the causes of the discrepancy, suggesting that both cyclical and structural factors have led to the elevated unemployment rate. Structural imbalances include the misalignment of academic disciplines with business requirements, while cyclical factors include the correlation between unemployment rates and services sector output gaps. Goldman also notes that China’s youth unemployment rate is not vastly different from countries such as Italy and Spain, both at a similar stage of development, but it is double that of the US. The report suggests that promoting further recovery of the services sector while exploring ways to reduce misalignment between discipline and business requirements will be key to reduce the youth unemployment rate over the medium term.

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