China youth unemployment will stay elevated in 2024, but EIU warns economic impact will linger

China's youth unemployment will likely stay elevated this year due to a lingering mismatch, according to the Economist Intelligence Unit. It explained the sheer number of new graduates, who often target hot manufacturing sectors, far outstrips jobs — the majority of which are still focused in the lower-skilled sectors.

Even though unemployment among China's young people should dissipate starting next year — when the country's working-age population declines – the effects of high youth unemployment will remain long after that, the consultancy added.

"Despite the upturn in China's labor market as a whole, the biggest improvements are concentrated in middle-aged groups and migrant workers," EIU analysts said in their China 2024 outlook report released Thursday.

"In contrast, the post‑Covid recovery has not eased the slack in the youth labor market. The surge in fresh graduates has not been met by a commensurate increase in new job opportunities. New hires are still being offered lower wages amid the labor oversupply," they added, saying automation poses a further threat to the number of jobs in China.

Excluding students, the unemployment rate for young people aged 16 to 24 in the world's second-largest economy stood at 14.9% in December, according to monthly data from China's National Bureau of Statistics released last Wednesday. This compares to China's broader urban unemployment rate of 5.1% for the same month.

China's youth unemployment rate had previously climbed to record highs exceeding 20% before the country's National Bureau of Statistics temporarily suspended the release of the group's unemployment rate last summer, citing the need to reassess calculation methods.

EIU pointed out, however, extended high youth