China politics and policy updates

Experts warn that President Xi Jinping’s efforts to reform China’s huge after-school tutoring industry may exacerbate another sensitive Beijing policy: rising youth unemployment.

under New comprehensive regulations, The country’s private education industry will be prohibited from profiting from teaching school subjects. Companies in industries with an annual output of 100 billion U.S. dollars will also be banned from accepting foreign investment.

However, some experts say that such intervention may exacerbate Beijing’s Complex policy issues The dissatisfaction among Chinese young people is growing day by day.

Christina Zhu, an economist at Moody’s Analysis, said that these changes are likely to exacerbate the rise in youth unemployment in China.

“The education industry is the main employment opportunity for college graduates, and the booming online tutoring industry provides millions of jobs,” Zhu said.

“The latest crackdown will put more pressure on youth employment, which may undermine the policy intent to increase the birth rate, because young people postpone marriage and raising children until they find a satisfactory job,” she said.

For a long time, keep jobs for a country of 1.4 billion people Basic policy goals Of the Chinese Communist Party.

Qu Hongbin, chief economist of HSBC Greater China, said: “When we talk about sustaining growth and recovery, ultimately for high-level politicians and top leaders, their ultimate goal is employment-this is the bottom line.”

according to Chinese official statistics, The country’s overall unemployment rate in June returned to about 5% before the pandemic.

But for 16-24 year-olds, the ratio is three times higher and “continues to climb”, while the ratio of college graduates is even higher, Zhu said.

For those with a university degree, this problem is particularly serious: According to HSBC data, in June 2020, the unemployment rate for degree holders aged 20-24 was 19.3%.

Capital Economics macro economist Julian Evans-Prichard pointed out that recent data revisions show that China’s employment contraction is faster than previously thought, reaching its peak in 2014 instead of 2017. He said that the rate of contraction last year was not “expected” until the middle of this century.”

Zhu pointed out that it is estimated that the private tutoring sector provides millions of jobs, and said that last year, the broader education sector accounted for 17% of the jobs for college graduates, the highest among all industries.

“University graduates prefer office work and have received training to work better in the service industry. However, the pandemic has dealt a serious blow to the service industry. The recovery is mainly concentrated in the manufacturing, IT and software industries, which has exacerbated young people. There is a mismatch between skills,” she said.

The entire industry is layoffs, including education companies New Oriental Education and Gaotu Techedu, And the technology group Byte beating, The owner of TikTok, has been aiming at the rapid growth of online education.

A former education department staff member who asked not to be named said: “They are still recruiting fresh graduates to serve as high school head teachers, but they are laying off primary and secondary school teachers.”

She is among them Rising numbers Chinese people seeking the safety of civil servants.

Another job seeker who also requested anonymity said: “In June, I received an offer letter from an educational institution. Fortunately, I decided not to accept this offer letter. I think this is risky because many education institutions at that time The company has already started delaying new hires and layoffs.”

Although the crackdown will greatly limit tutoring work, especially for core exam subjects, because all tutors are required to have teacher qualifications, the largest for-profit education companies are turning to after-school care services.

However, Zhu expects that the economy will suffer further collateral damage, including a blow to the advertising revenue of Chinese Internet companies, which “is expected to drop significantly because private tuition providers are the main contributors.”

Experts are divided on the fundamental reasons for the reform of the tutoring industry. Some people accept the government’s reasons for increasing the burden of education in the context of rising inequality and the high cost of raising children. These are the reasons for the decline in the country’s birth rate.

Others pointed out more broadly Under Xi’s efforts To strengthen the Chinese Communist Party Ideological control Or try to prevent further US restrictions on investment by Chinese companies in advance.

Additional report by Sherry Fei Ju in Beijing

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