July 24, 2021: In a pattern similar to what other industrialized nations have already experienced, China not only has a labor shortage because of a low middle class birth rate, they are now experiencing the side effects of too many university graduates. Currently about 54 percent of young (18-22) Chinese will obtain university degrees and a growing percentage of them cannot find jobs that justify the effort and expense that went into obtaining a diploma. In 2021 over nine million recent university graduates went looking for a job. That was four percent more than 2020 and most will not find a job that requires a university degree. Even grads with STEM (Science, Technology, Engineering, Math) degrees are not guaranteed a job and, even if they get an offer, it is not as attractive (well-paid and in their field) as a decade ago. Many have to settle for low-level (high school) teaching jobs. The military is always seeking STEM grads but this is considered second-best because pay and benefits are not great and working conditions are often very unattractive, especially in the navy where ships spend more and more time at sea. Another problem with the military is that you have to qualify to be an officer and that excludes many STEM grads who cannot meet the physical or gender (males preferred) requirements.

Over a decade ago it was noted that while China was getting rich, there was much corruption in the government, the military and even the universities. This created a growing number of unhappy Chinese, and they have a lot of unemployed, often because of corruption. Job seekers are cheated and exploited by corrupt employers and officials on a regular basis. These problems are especially painful for the half of new job seekers who have a university degree.

Difficulty for university grads getting a suitable job is nothing new. In the past, whenever there was an economic downturn, like in 2008, 30 percent of university students could not find a suitable job right away and taking anything caused problems later on because to future employers that meant you were not a prime candidate right out of university.

Despite the tight censorship on Chinese Internet social media there is an increasing amount of chatter by recent university graduates about the need for change. Attempts to fix the core problem, corruption, are not working for most Chinese, especially new university grads and that is seen as menacing by Chinese in general. Historically Chinese dynasties usually fell because they were weakened, and torn apart by rebels enraged by the corruption. That's one reason why communists gained power in 1949. But their virtuous new government began to show signs of corruption within a decade, and it's gotten much worse since communist economic policies were dumped in the 1980s. What goes around, comes around, slowly and inexorably.

A decade ago, the annual number of university graduates rose from 1.4 million in 2002 to 3.4 million 2005 and 6.3 million in 2010. In 2002 only 15 percent of young Chinese were seeking a university degree and a decade later it was already a problem. Just passing the high school exam that qualified you for university entrance did not mean you got into the more prestigious schools. For parents who could afford it, or were willing to go into debt, getting into a foreign university was an expensive option. That meant improving the required foreign language skills and being away from home for a long time, especially if the graduate received better job offers overseas.

A decade ago, the military offered another solution. Back then the military wanted to upgrade their officer quality by requiring all new military officers to be university grads. A decade ago, only 5.7 percent of military personnel were university grads. While every Chinese male is technically subject to conscription, in practice the military depends on volunteers and recently potential recruits were allowed to apply on-line. The max age has been raised to 24 to make it easier for college graduates to join, usually for three years. The military provides more opportunities for university grads as in higher paid technical jobs and promotion of officer rank. On the downside, you could not make as much money as ambitious and able STEM grads could.

The armed forces devoted more resources to recruiting recent grads. This often worked, especially when the economy was unable to provide all grads with suitable jobs. The military presented itself as an opportunity, and an adventure as well. If nothing else, a new grad could spend a few years in the military, and with that resume enhancement, become a reserve (part time officer) and go find a good civilian job without a blemish on their resume. Having served as an officer gave young university grads a political edge in obtaining some very desirable jobs. The military was particularly eager to snag grads with technical (STEM) skills. This worked, but not as well as the military expected. The new officers with degrees were often there because the alternative was a factory job, as a worker and not a supervisor. Too many of these new officers left after their initial term of service and many were not interested in becoming a reserve officer.

Another option was to seek a job in the secret police. This is the MSS (Ministry of State Security) and it puts more emphasis on political reliability than higher education. Serving as an officer in the MSS is a great resume enhancer but mandatory service terms in the MSS are longer and entry requirements in general are more demanding than with the military. Pay is not great and the MSS is becoming less and less popular with most Chinese.

Periodic economic recessions were not the only problem new grads faced. There were local economic problems that are threatening the Chinese economy in the long term. These include problems with the banking system and a housing bubble. Both of these are corruption-related and have, for over a decade, been more than the government can handle. So far, the situation has been controlled, even if it’s at the expense of economic growth. That means more unemployment or underemployment, especially for recent university grads. Manufacturing and service industries see this as an opportunity by increasing the education levels of jobs that were once seen as not requiring a university education.

Despite the booming economy, it’s still hard for many college grads to get a job. This was obvious a decade ago when the unemployment rate of university graduates was over 10 percent, compared to 4.1 percent for urban workers in general. The government does not see this as a problem because a high proportion of the population having a university degree provides a reserve of talent for future crises. The less optimistic, or more realistic, senior leaders see this surplus of university grads as the organizers of the next revolution. So do Chinese in general.