Crackdown On China's Tech Industry Leaves Young Grads Unemployed

A sweeping crackdown by Beijing on the country’s private sector, that began in late 2020, and its unwavering commitment to a zero-COVID policy, have hit the economy and job market hard, Laura He reported for CNN Business.

Photo Insert: Jack Ma's companies were among the first to feel the wrath of Beijing.

A record 10.76 million college graduates entered the job market this year, at a time when China’s economy is losing the ability to absorb them. The youth unemployment rate has repeatedly hit new highs this year, rising from 15.3% in March to a record 18.2% in April and reached 19.9% in July.

The rate fell slightly to 18.7% in August, but still remains among the highest ever, data from the National Bureau of Statistics showed on Friday.

That means there are about 20 million people aged 16 to 24 out of work in cities and towns, based on the urban youth population of 107 million. Rural unemployment isn’t included in official data.

“This is certainly China’s worst job crisis for young people” in over four decades, said Willy Lam, a senior fellow of the Jamestown Foundation in Washington D.C.

“Mass unemployment is a big challenge for the Communist Party,” he said, adding that providing economic growth and job stability is key to the Party’s legitimacy. And, perhaps nowhere is the crisis more visible than in the tech sector, which has been suffering from the regulatory crackdown by the government and far-reaching US sanctions against China.

The once-freewheeling industry was long the main source of high-paid jobs for young, educated workers in China, but major companies are now downsizing at a scale not seen before.

Alibaba, the e-commerce and cloud titan, recently posted flat revenue growth for the first time since becoming a public company eight years ago. It reduced its workforce by more than 13,000 in the first six months of this year.

This is the biggest reduction in its staffing since Alibaba was listed in New York in 2014, according to CNN calculations based on its financial documents.

Tencent, the social media and gaming giant, let go nearly 5,500 employees in the three months to June. This was the biggest contraction in its workforce in more than a decade, according to its financial records.

“The significance of these latest tech industry cuts cannot be understated,” said Craig Singleton, senior China fellow at the DC-based Foundation for Defense of Democracies.

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