The total jobless rate runs mostly parallel relative to the surveyed jobless rate in the 25-59 age range. However, for the 16-24 age range, the jobless rate has skyrocketed to 21.3%. If it were to be assumed that the 25-59 age group is the prime consumer/investor of investable assets such as property, then the trends in property consumption indicate that this group is largely unable to, despite the reported strong PMI. This is an indirect indicator of an affordability crisis.

The jobless rate in the 16-24 age range is a matter of concern. Unlike countries in the Western Hemisphere, a college education isn’t culturally considered a necessary path to employment in most of Asia. In fact, many young workers graduate directly from «technical» schools and enter the workforce. As of 2021, the Chinese government stated that 57.3% of its youth are enrolled in higher education programs. Even after factoring that in, unemployment among the 16-24 range runs nearly double that of the total rate.

It’s no omission that the jobless rate estimates stop at June. The National Bureau of Statistics, citing a need for refining its calculations, has halted the publication of this metric with no stated date for resumption. Instead, a spokesperson for the organization stated that the employment situation among college graduates in China is «generally stable» and even «slightly higher» than last year. In an article for financial publication Caixin, Peking University’s economics professor Zhang Dandan posited that the true unemployment rate could be as high as 46.5% if it includes those who are neither in school nor actively looking for work. This article was withdrawn shortly thereafter.

A recurrent feature of Chinese youth’s reluctance has been the low wages relative to the jobs they would be expected to perform. China’s political leadership had in recent times come off rather unsympathetic to such concerns by exhorting the youth to lower their expectations and «eat bitterness» (i.e. «toughen up»).

There’s a very sound strategic reason why China’s political leadership and business magnates might not want to address stagnant/»unlivable» wages: raising wages would increase the cost of its goods and services, thus opening up the potential for substitution by a number of other countries with stronger labour laws that are still cheaper than producing in leading Western economies. Unlocking wages thus might disrupt China’s «crucible» pillar unless it provides a very high level of value addition as an incentive.

Market Effects

Let’s consider two indices. First, the Shanghai Stock Exchange Composite Index (SSEC), which is comprised of both yuan-denominated «A Shares» (open only to domestic and certain qualified foreign institutional investors) and US dollar-denominated «B-Shares» (meant for foreign investors but also open to certain domestic investors). Next is the Hang Seng Index (HSI), comprised of the 60 largest companies that trade on the Hong Kong Exchange (HKEX) including Alibaba, JD.com, Lenovo, Meituan and so forth.

Let’s also consider another instrument that has been gaining popularity in recent times to gauge market performance over the past one year: the KraneShares MSCI All China Index ETF (KALL). Tracking the MSCI China All Shares Index, this fund offers exposures to A-Shares, B-Shares and Hong Kong-listed «H-Shares».