In the second quarter of the year, China’s GDP fell to 0.4% against an annual target of 5.5%. The economy has contracted significantly - impacted by major city lockdowns driven by China’s Covid Zero policy and a slump in the property investment market.
The China Common Prosperity program, launched by President Xi Jinping in August 2021 and designed to narrow the growing gap between the very rich and everyone else, is having an impact on business growth, particularly in the education, entertainment and technology sectors. With a pledge to “reasonably regulate excessively high incomes and encourage high-income people and enterprises to return more to society”, there is a focus on increasing prosperity in the rural regions and stemming the growth of uncontrolled capitalism.
Consulting firm Young China Group has identified a growing mismatch between the skills and expectations of younger workers and the availability of jobs. More young people have entered University in recent years, creating an oversupply of graduates seeking white collar opportunities, while the jobs growth has been in lower skilled manufacturing jobs. Many young workers have been impacted by the government’s crackdown on private education tutoring companies – a common source of employment for new graduates.
Outlook for employers: Chinese graduates tend to prefer opportunities in state-owned and government enterprises, which offer greater employment security. Even though foreign companies in China typically offer higher salaries, they are experiencing a slowdown in hiring activities amid increasing turbulence in the economy and impact arising from the common prosperity program. However, the increasing unemployment rate among the youth does provide a bigger talent pool for employers who face labor challenges in North America and Europe.